1. 2. Bahiya Company pays the CEO's loan and records it as company expense, A) Monetary principle B) Economic entity concept C) Fair Value measurement D) Cost Principle Archer Corporation, a publicly traded U.S. company measures financial elements using the dollar. A) Monetary principle B) Economic entity concept C) Fair Value measurement D) Cost Principle Batool decided to start her own CPA practice. She purchased the machine for $75,000 when the market price is $80,000. The corporation records the building at $80,000. A) Monetary principle B) Economic entity concept C) Fair Value measurement D) Cost Principle 3. 4. At the end of the current accounting period, account balances were as follows: Cash, $180,000; Accounts Receivable, $75,000; Share Capital, $20,000; Retained Earnings, $65,000. Liabilities for the period were: A) $ 70,000. B) $170,000. C) $190,000. D) $210,000. 5. At the beginning of the period, assets were $490,000 and shareholders' equity was $240,000. During the year, assets increased by $60,000, liabilities increased by $40,000, and shareholders' equity increased by $20,000. Beginning liabilities must have been: A) $230,000 B) $250,000 C) $280,000. D) $300,000. 6. Shareholders' equity for Commerce Corporation on January 1, 20X6 and December 31, 20X6 were $60,000 and $75,000, respectively. Assets on January 1, 20X6 and December 31, 20X6 were $115,000 and $105,000, respectively Liabilities on January 1, 20X6 were $55,000. What is the amount of liabilities on December 31, 20X6? A) $40,000 7. Identify the missing amount in the accounting equation for each example below: Assets Liabilities Shareholders' Equity A) $230,00 ? $120,000 0 B) ? $250,00 $90,000 0 $220,00 $120,00 ? 0 0 8. Indicate each item whether the account is Asset (A), Liabilities (L) and Equity (E) and which financial statement it would appear: the Income Statement (IS), Balance Sheet (BS), or Statement of Retained Earnings (RE): a) Retained Earning, ending b) Accounts Receivable c) Accrued expenses d) Share Capital e) Cash f) Equipment g) Accounts Payable h) Prepaid expenses i) Dividend 9. Indicate in the space provided by each item whether the account is Asset (A), Liabilities (L) and Equity (E) and which financial statement it would appear on either the Income Statement (IS), Balance Sheet (BS), or Statement of Retained Earnings (RE): a. b. c. d. e. f. g. h. i. j k. I. Account payable Cash Retained earnings, beginning Share Capital Account receivable Computer Accrued Expense Land Revenue Dividend Wages Expense Equipment ACCOUNTING EQUATION EXERCISE Ex 1 Asset = Liabilities Equity No Transactions 1 Haya Corporation issued $50,000 shares to start the company 2 Earned $20,000 services performed; received cash of $5,000 and remainder on account 3 Purchased office supplies worth $3,000 on account 4 Paid $2,000 for salary expenses 5 Purchased office equipment worth $30,000; paid $3,000 cash and sign a note payable for the balance. 6 Collected $3,000 from customer on account 7 Incurred rent expense of $3,000 for the month. 8 Paid for the amount due for office supplies purchased in no.3 9 Paid dividend of $7,000 10 Received $4,000 cash for services performed
