1. Payment of a $2,500 Accounts Payable;

a. increases an asset $2,500; decreases an asset $2,500.

b. increases an asset $2,500; decreases a liability $2,500.

c. decreases a liability $2,500; decreases an asset $2,500.

d. decreases a liability $2,500; decreases a stockholders equity $2,500.

2. At December 1, 2020, Red Companys accounts receivable balance was $5,200. During December, Red had credit revenues of $7,250 and collected accounts receivable of $5,250. At December 31, 2020, the accounts receivable balance is:

a. $5,200 debit.

b. $5,250 debit.

c. $7,200 credit.

d. $7,200 debit..

3. A company spends $10 million dollars for an office building. Over what period should the cost be written off?

a. When the $10 million is expended in cash.

b. All in the first year.

c. Over the useful life of the building.

d. After $10 million in revenue is recognized.

4. At January 1, 2020, Pretty Slow Industries reported retained earnings of $150,000. During 2020, Pretty Slow had a net income of $50,000 and paid dividends of $15,000. At December 31, 2020, the amount of retained earnings is:

a. $50,000.

b. $150,000.

c. $185,000.

d. $200,000.

5. The accounting equation for Green Enterprises is as follows:

Assets Liabilities Stockholders' Equity

$200,000 = $50,000 + $150,000

If Green purchases a computer on account for $20,000, the accounting equation will change to

Assets Liabilties Stockholders' Equity

a. $200,000 = $50,000 + $150,000

b. $200,000 = $70,000 + $130,000

c. $220,000 = $50,000 + $170,000

d. $220,000 = $70,000 + $150,000