ACT 201 I. 2. Practice Exam for Exam 1 If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be: Assets increase $1,300 and liabilities decrease $1,300 A. B. C. D. One asset increases $1,300 and another asset decreases $1,300, causing no effect Assets decrease $1,300 and equity decreases $1,300 Assets decrease $1,300 and equity increases $1,300 E. Assets increase $1,300 and liabilities increase $1,300 Adriana Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Adriana Graphic Design make to record this transaction? Account Debit Credit A. Cash 1,500 Accounts Receivable 1,500 B. Cash 1,500 Unearned Design Revenue 1,500 C. Accounts Receivable 1,500 Unearned Design Revenue 1,500 D. Accounts Payable 1,500 Design Revenue 1,500 E. None of the above 3. An example of a financing activity reported on the statement of cash flows is: A. Buying office supplies B. Obtaining a long-term loan C. Buying office equipment D. Selling inventory E. Buying land for factory construction 4. Kent Company's 2020 financial information shows the following: Total Assets Owner, Capital Owner, withdrawals 188,000 Revenues 40,000 29,000 Expenses 10,600 16,000 The amount of total liabilities must equal: A. $188,000 B. $145,600 C. $82,300 DE D. $105,800 E. None of the above