1. If a company receives $10,900 from the owner to establish a proprietorship, the effect on the accounting equation would be:

Assets decrease $10,900 and equity decreases $10,900.

Liabilities increase $10,900 and equity decreases $10,900.

Assets increase $10,900 and liabilities decrease $10,900.

Assets increase $10,900 and liabilities increase $10,900.

Assets increase $10,900 and equity increases $10,900.

2. At year-end, a trial balance showed total credits exceeding total debits by $5,450. This difference could have been caused by:

An error in the general journal where a $5,450 increase in Accounts Receivable was recorded as an increase in Cash.

An error in the general journal where a $5,450 increase in Accounts Payable was recorded as a decrease in Accounts Payable.

The balance of $54,500 in Accounts Payable being entered in the trial balance as $5,450.

A net income of $5,450.

The balance of $6,100 in the Office Equipment account being entered on the trial balance as a debit of $650.