1. Barro Corporation received $50,000 cash invested by its owners. The effect on the fundamental accounting model was

A. assets and liabilities each increased by $50,000.

B. assets and revenues each increased by $50,000.

C. stockholders' equity and revenues each increased by $50,000.

D. stockholders' equity and assets each increased by $50,000.

2. M Corporation purchased a truck for $10,000 cash. Which of the following statements regarding this purchase is incorrect?

A. The net income for M will be reduced by the $10,000 expense of the truck.

B. The total amount of assets on M's balance sheet will not change.

C. The total liabilities will not change.

D. The amount of the stockholders' equity on M's balance sheet will not change.

3.Which of the following direct effects on the fundamental accounting equation is not possible as a result of transactional analysis?

A. An increase in an asset and a decrease in another asset.

B. A decrease in a liability and a decrease in an asset.

C. An increase in stockholders' equity and a decrease in an asset.

D. An increase in an asset and an increase in stockholders' equity.

4. Which of the following transactions will cause both the left and right side of the equation to increase?

A. We collect cash from a customer who owed us money

B. We pay a supplier for inventory we previously bought on account

C. We borrow money from the bank

D. We purchase equipment for cash

5. When a company buys equipment for $60,000 and pays for one third in cash and the other two thirds is financed by a note payable, the following are the effects on the equation

A. cash decreases by $20,000

B. equipment increases by $60,000

C. liabilities increase by $40,000

D. All of the above effects occur on the equation