1) A service company has total liabilities of $200,000. Its non-current liabilities are worth $110,000 and interest payable amounts to $40,000. Current liabilities are:

a) $200,000

b) $40,000

c) $90,000

d) $160,000

2) If a business records a telephone expense in March but does not pay the bill until June, which of the following is true?

a) In June, debt decreases, expenses increase and equity decreases

b) In March, debt increases, expenses increase and equity does not change

c) In June debt decreases and in March equity and cash decrease

d) In March, debt increases, expenses increase and equity decreases

3) Your monthly payment to the bank is $1,000, interest being $950 and principle $50. After each payment is made, which of the following is true?

a) Decrease cash by $1000, increase net worth by $50

b) Decrease cash by $1000, decrease net worth by $1000

c) Net worth decreases by $950

d) Decrease cash by $950, increase debt by $50