4) Paying cash for entertainment:

a) involves two entries to the balance sheet

b) involves an entry to the balance sheet and an entry to the income statement

c) involves two entries to the income statement

d) involves two entries to the balance sheet and one entry to the income statement

5) Examples of assets include:

a) cash, accounts receivable, office supplies

b) cash, accounts receivable, salaries expense

c) cash, prepaid expenses, unearned revenue

d) cash, accounts receivable, unearned revenue, revenue

6) If the value of equity is initially $10,000, calculate the value of equity after the following transactions: cash revenues $9,000, prepay rent $3,000, pay bank loan principle $2,000, pay maintenance fees $4,000 and buy a computer on account for $1,000.

a) $13,000

b) $9,000

c) $11,000

d) $15,000

7) The role of the income statement is:

a) to record assets and liabilities

b) to record what we own versus what we owe

c) to record revenue and expenses

d) to record only cash sales and expenses