BASICS OF ACCOUNTING EXAM Theory 1. What is the impact on the accounting equation when a payment of account payable is made? a) both sides increase (c) both sides decrease b) neither side changes d) only the Asset side changes 2. Non-current Assets- 15000 ; Current Assets-16600 ; Current Liabilities-7800 ; Revenues- 56000 ; Expenses- 36000 . What is the Equity? 3. The result is net loss, when: a) Revenues exceed expenses. b) Expenses exceed revenues. 4. What is the impact on the accounting equation when a current month's utility expense is paid? a) both sides increase b) only the Asset side changes c) both sides decrease d) neither side changes 5. Identify the correct components of the income statement. a) assets, liabilities, and owner's equity b) revenues, expenses, investments by owners, distributions to owners c) revenues, profit (losses), expenses d) assets, liabilities, and dividends 6. What are assets? a) Items the business owes. b) Items the business owns or control. 7. Which of the following statements is true? a) Tangible assets will be consumed in over a year. b) Tangible assets have physical substance. c) Tangible assets will be consumed in a year or less. d) Tangible assets lack physical substance. 8. Cash is: a) Non-current assets. b) Current assets. 9. What is a creditor? a) Any person or business to whom a business owes money. b) Persons who provide the money to get a business going. 10. If the business will be paying cash in the future, the company will record: a) An account receivable b) An account payable 11. Which of the following is an external user of a business's financial information? a) Employees b) Lenders c) Managers. 12. The balance sheet reports the: a) Financial position on a specific date. b) Results of operation on a specific date. c) Financial position for a specific period. d) Results of operations for a specific period