Principle of accounting
Question 2: Multiple Choice Questions(40) 1. Zion Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It buys office equipment on credit for $75,000. What would be the effects of this transaction on the accounting equation? A. Assets increase by $75,000 and expenses increase by $75,000. B. Assets increase by $75,000 and expenses decrease by $75,000. C. Liabilities increase by $75,000 and expenses decrease by $75,000. D. Assets decrease by $75,000 and expenses decrease by $75,000. E. Assets increase by $75,000 and liabilities increase by $75,000. 2 On September 30, the Cash account of Value Company had a normal balance of $5,000. During September. the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of September? A. A SO balance. B. A $4,300 debit balance. C. A $4,300 credit balance. D. A $5,700 debit balance. E. A $5,700 credit balance. On April 30, a three-year insurance policy was purchased for $18,000 with coverage to begin immediately. What is the amount of insurance expense that would appear on the company's income statement for the year ended December 31? A. $500. B. $4,000. C. $6,000. D. $14,000. E. $18,000. A company had revenues of $75,000 and expenses of $62,000 for the accounting period. The owner withdrew $8,000 in cash during the same period. Which of the following entries could not be a closing entry? A. Debit Income Summary $13,000; credit Owner's, Capital $13,000 B. Debit Income Summary $75,000; credit Revenues $75,000. C. Debit Revenues $75,000; credit Income Summary $75,000. D. Debit Income Summary $62,000, credit Expenses $62,000. E. Debit Owner's, Capital 58.000, credit Owner's, Withdrawals $8,000. A debit memorandum is: A. Required whenever a journal entry is recorded. B. The source document for the purchase of merchandise inventory. C. Required when a purchase discount is granted. D. The document a buyer issues to inform the seller of a debit made to the seller's account in the buyer's 5
