1. If assets are $418,000 and liabilities are $183,000, then equity equals:

Multiple Choice

• $1,019,000.
• $601,000.
• $418,000.
• $183,000.
• $235,000.

2. The assets of a company total $722,000; the liabilities, $211,000. What are the net assets?

Multiple Choice

• $933,000.
• $722,000.
• $511,000.
• $211,000.
• It is impossible to determine unless the amount of stockholder investments is known.

3. If a company receives $10,600 from its sole stockholder to establish a corporation, the effect on the accounting equation would be:

Multiple Choice

• Assets increase $10,600 and equity increases $10,600.
• Liabilities increase $10,600 and equity decreases $10,600.
• Assets increase $10,600 and liabilities increase $10,600.
• Assets increase $10,600 and liabilities decrease $10,600.
• Assets decrease $10,600 and equity decreases $10,600.

4. A company's balance sheet shows: cash $43,000, accounts receivable $49,000, equipment $88,000, and equity $91,000. What is the amount of liabilities?

Multiple Choice

• $180,000.
• $171,000.
• $89,000.
• $87,000.
• $271,000.

5. Saddleback Company paid off $39,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Multiple Choice

• Assets, $39,000 decrease; equity $39,000 decrease.
• Liabilities, $39,000 decrease; equity, $39,000 increase.
• Assets, $39,000 decrease; liabilities, $39,000 increase.
• Assets, $39,000 decrease; liabilities, $39,000 decrease.
• Assets, $39,000 increase; equity, $39,000 increase.