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1. Which of the following events does not involve an exchange of value? A. Payment of a debt B. Purchase of a building on credit C. Loss from theft D. Borrowing money E. None of these 2. An investment by the owner in a business: A. increases assets and owner's equity B. increases assets and liabilities C. increases liabilities and owner's equity D. increases assets only E. None of these 3. An income: A. decreases assets and liabilities B. Increases owner's equity C. leaves total equity unchanged D. is basically same as a liability E. None of these 4. Which of the following is not a satisfactory statement of the Balance sheet equation? A. Assets = liabilities - owner's equity B. Assets - liabilities = owner's equity C. Assets = liabilities + owner's equity D. Assets - owner's equity = liabilities E. None of these 5. The purchase of an asset on credit: A. increases assets and owner's equity B. increases assets and liabilities C. decreases assets and increases liabilities D. increases assets and decreases assets E. None of these 6. The best definition of assets is: A. the collection of resources belonging to the company and the sources of, and claims on, these resources.B. the cash owed by the company. C. the resources belonging to a company having future benefit to the company. D.the owner's investment in the business. E. None of these 7. Which of the following accounts is an asset? A. Withdrawal B. Notes Payable C. Supplies Expense D. Prepaid salary E. None of these 8. A withdrawal by an owner: A. increases assets and owner's equity B. increases assets and decreases owner's equity C. decreases assets and owner's lity D. decreases assets and increases owner's equity E. None of these 9. How will the Accounting equation be influenced by the event the death of the manager of the firm? A. Assets increase & decrease. B. Assets increase & Liability increase. C. Income increase. D. The equation would not be affected. E. All of the above. 10. Which of the following accounts would be increased with a debit? A. Withdrawal account B. Legal Fees Earned C. Rent Payable D. Capital Account E. None of these 11. The Office Supplies account is classified as an: A. asset B. liability C. expense D. revenue E. None of these 12. Which of the following events would not require a journal entry? A. Purchase of a one-year insurance policy. B. Agreement to perform a service at a future date.C. Performance of a service. D. Payment for a service performed previously. E. None of these 13. The process of transferring journal entry information from the journal to the ledger is called A. journalizing B. ledgering C. posting balancing D. Trial balance E. None of these 14. Which of the following accounts has a normal credit balance? A. Withdrawal account B. Advertising Fees Earned C. Equipment Account D. Interest Expense E. None of these 15. Ending balance of owners equity is shown in the: A. Income statement B. Statement of owner's equity C. Cash flow statement D. All of these E. None of these 16. The payment of business debts: A. Increase in Liability B. Increase in stockholder equity. C. Has no effect on Stockholder equity (Capital) D. Increase in Assets. 17. A company performed delivery services for a customer for cash. The correct debit and credit are: A. Debit Cash; Credit Unearned Delivery Fees B. Debit Accounts Receivable; Credit Delivery Fees Revenue C. Debit Cash; Credit Delivery Fees Revenue D. Debit Delivery Fees Revenue; Credit Unearned Delivery Fees E. None of these 18. As of December 31,2005 ABC Company has Assets of $ 99,000& Owners Equity of $ 47,850. What are the liabilities for ABC Company? A. $ 50,000. B. $ 99,000. C. $47,850. D. $1,46,850. E. $51,150. 19. The owner, Roon, withdrew Tk. 15,000 cash from the business. The correct journal entry is: A. Roon, Capital 15,000 Cash 15,000 B. Roon, Drawing 15,000 Cash 15,000 C. Cash 15,000 Roon, Drawing 15,000 D. Cash 15,000 Roon, Capital 15,000 E. None of these 20. Determine the amount of liabilities of a firm for the following transaction: Assets $28,00,000, Owners Equity $ 20,00,000, Income $3,60,000 & Expenses $1,60,000. A $3,00,000. B.$ 6,00,000 C. $7,20,000. D. $4,00,000. E. None. 21. The assets arising from sale goods or services on account or on credit to customers is called: A Notes payable. B.Liability. C. Income. D. Accounts Receivable. E.Expenses. F.All. 22. Borrowed money from Sonali Bank: A. Assets increase & Capital increase. B.. Assets increase & decrease. C. Assets & Liability increase. D. Assets & Liabilities decrease. E. None. 23. The return of defective equipment to the supplier: A. Increase assets & capital. B. Decrease assets & capital. C. Increase assets & Liabilities. D. Decrease assets & Liabilities. E. Increase one asset & decrease another asset. F. None 24. Cash and those assets which are likely to be converted into cash within one year or less than one year the balance sheet date is called: A. Accounts payable. B.Long term Assets. C.short term Assets. D. Current Liabilities. 25. A business can choose a fiscal year that correspond to: A. The Calendar year. B. The natural business year. C. Any twelve month period. D. The budgeted year. E. The Accounting year.F. All of the above. 26. Stockholder invested cash by buying capital stock: A. Assets increase & Assets decrease. B. Assets increase & Capital decrease. C. Assets increase & Liability increase. D. Has no effect on the Accounts payable. E. All. 27. Paid for equipment purchase earlier on account A. Assets increase & decrease. B. Assets increase & Liability increase. C. Assets increase & Liability decrease. D. Assets decrease & liability decrease. E. Assets & Capital increase. 28. Paid dividend to owners: A. Assets increase & Capital increase. B. Assets decrease & Capital decrease. C.Assets & Liability increase. D. Assets & liability decrease. E. Remained the same. 29. Sold furniture at cost for cash at no gain or loss: A. Assets decrease & increase. B. Capital increase. C. Liability decrease. Liability increase. D. Assets & Capital increase. E. Has no effect on Capital. 30. Determine the amount of Income (x) for the following information: Assets $ 4,00,000; Liabilities $3,00,000 : Capital 2X ; Expenses $2,00,000. Income (x) is: A. $1,00,000. B. $50,000. $75,000. C. $1,50,000. D. $3,50,000. E. None of the above. 31. Arrowhead Boat Shop purchased a truck for $36,000, making a down payment of $15,000 cash and signing a $21,000 note payable due in 60 days. (Indicate all correct answers.) A. Total assets increased by $36,000. B. Total liabilities increased by $21,000. C. From the viewpoint of a short-term creditor, this transaction makes the business less solvent. D. This transaction had no immediate effect upon the owner's equity in the business. 32. According to the rules of debit and credit for balance sheet accounts: A. Increases in asset, liability, owner's equity accounts are recorded by debits.B. Decreases in asset, and liability accounts are recorded by credits. C.Increases in asset and owner's equity accounts are recorded by debits.D. Decreases in liability and owner's equity accounts are recorded by debits. 33. On March 31, the ledger for Regal Dry Cleaning consists of the following: Cleaning Equipment $27,800 Accounts Receivable $21,000 Accounts Payable 15,700 Cash 6,900 R. Temple Capital 20,000 Salaries Payable 9,600 Office Equipment 2,000 Notes Payable 22,500 Automobile 7,500 Cleaning Supplies 2,600 In a trial balance prepared on March 31, the total credit column is: A. $67,800. B. $93,100. C. $25,300.D. $65,300 34. The following journal entry was made in Dixie Stores' accounting records: Cash 24,000 Notes Receivable 96,000 Land 1,20,000 This transaction: A. Involves the purchase of land for $1,20,000. B. Involves a $24,000 cash payment. C. Involves the sale of land for $1,20,000. D. Causes an increase in total assets of $24,000. 35. The net income or loss for a particular period of time is reported on which of the following? A. Income statement. B. Balance sheet. C. Statement of cash flows. D. Statement of changes in owner's equity. E. All of the above 36. The financial position of the business on a given date is reported on which of the following? A. Income statement. B. Balance sheet. C. Statement of cash flows. D. Statement of changes in owner's equity. E. All of the above 37. Determine the amount of Income (X) for the following information: Assets $18,00,000; Liabilities $13,50,000 : Capital 6X; Expenses $9,00,000. Income (X) is: A. $1,00,000. ; B. $50,000. ; C. $75,000.; D. $1,50,000.; E. $4,50,000. F. None 38. During the current year, the assets of Dobson increased by $87,000, and the liabilities decreased by $21,000. If the owner's equity in the business is $2,37,000 at the end of the year, the owner's equity at the beginning of the year must have been: A. $1,71,000; B.$1,29,000; C. $3,45,000; D. $3,03,000 E. None of the above. 39. A transaction caused a $80,000 decrease in both total assets and total liabilities. This transaction could have been: A. Purchase of a delivery truck for $80,000 cash; B. An asset with a cost of $80,000 was destroyed by fire. C. Payment of a $80,000 bank loan. D. Collection of a $80,000 account receivable. 40. Beginning capital was $10,000. Withdrawals were $24,000. The owner made additional investments during year of $60,000. The ending capital balance was $90,000. What was the net income or net loss for the period? A. Net income, $44,000 B. Net loss, $44,000 C. Net income, $56,000 D. Net income, $30,000 E. None of the above 41. Using the following data, the net income (loss) is Tk. Revenue Tk. 80,000 Utilities expense Tk. 2,500 Salary expense 25,000 Withdrawal 10,000 Rent expense 14,000 Office equipment 200,000 A. profit 28,500 B. loss 171,000 C. profit 38,500 D. loss 161,500 E. None of these 42. From the following information, the ending capital is: Capital, beginning Tk. 20,000 Withdrawal 4,000 Net loss 7,000 A. 17,000 B. 23,000 C. 31,000 D. 9,000 E. None of these 43. The financial statements usually presented to a company's owner, outside investors, and creditors are the A. Revenues, expenses, assets, liabilities, and owner's equity. B. Income statement, balance sheet, and statement of owner's equity C. Income statement and balance sheet D. Income statement, balance sheet, statement of owner's equity, cash flow statement and notes. E. None of these 44. If during the accounting period the assets increased by $5,000, and equity increased by $1,000, then how did liabilities change? A. Increased by $6,000 B. Decreased by $6,000 C. Increased by $4,000 D. Decreased by $4,000 E. Decreased by $1,000. E. None of these 45.If during the accounting period the assets increased by $7,000, and equity decreased by $3,000, then how did liabilities change? A. Increased by $10,000 B. Decreased by $10,000 C. Increased by $4,000 D. Decreased by $4,000 E. Decreased by $2,000. E. None of these 46. Services rendered for cash will have what effect on the components of the accounting equation? A.Increase in cash and a decrease in equity B. Increase in cash and a increase in equity C. Decrease in cash and an increase in equity D. Increase in fees earned and a decrease in equity E. Decrease in cash and a decrease in equity E. None of these 47. A sole proprietor recorded the payment of an account payable to an office supplies store. What effect will recording the transaction have on the components of the accounting equation? A. Increase an asset, increase a liability B. Decrease an asset, decrease a liability C. Increase an asset, increase owner's equity D. Decrease an asset, decrease owner's equity. E. Increase one asset and decrease another asset 48. Purchasing supplies for cash will have what effect on the components of the accounting equation? A. Increase in cash and a decrease in equity B. Increase in cash and an increase in supplies C. Increase in supplies and a decrease in cash D.Increase in equipment and an increase in equity E. None of the above 49.Services rendered for cash will have what effect on the components of the accounting equation? A. Increase in cash and a decrease in equity B. Increase in cash and a increase in equity C. Decrease in cash and an increase in equity D. Increase in fees earned and a decrease in equity E. Decrease in cash and a decrease in equity. E. None of these 50. Opening capital was $15,000. Withdrawals were $36,000. The owner made additional investments during year of $90,000. The ending capital balance was $1,35,000. What was the net income or net loss for the period? A. Net income, $66,000 B. Net loss, $66,000 C. Net income, $84,000 D. Net income, $45,000 E. None of the above. ANSWER SHEET Name: ID: Section: Question No. Your Answer Correct Answer 1 2 3