Accounting Equation Quiz
20 multiple-choice questions with answers and explanations · 10 easy, 8 medium, 2 hard
Assets = Liabilities + Equity: how each transaction changes the equation, the expanded equation, and classifying accounts as assets, liabilities, equity, revenue or expenses.
- 1Accounting Equation Example: Buying Inventory on CreditA shop buys $4,000 of inventory on credit from a supplier. What is the effect on the accounting equation?easy
- 2Accounting Equation Example: Paying a SupplierA business pays $1,500 in cash to a supplier for an amount it already owed. What is the effect on the accounting equation?easy
- 3Account Type Quiz: Is Accounts Receivable an Asset or a Liability?Accounts Receivable is classified as:easy
- 4Assets, Liabilities or Equity: Classifying Prepaid InsuranceA business pays for 12 months of insurance cover in advance. On the day of payment, the amount paid is:easy
- 5Expanded Accounting Equation: The FormulaWhich of the following shows the expanded accounting equation for a sole proprietorship?easy
- 6Accounting Equation Example: Owner Withdraws CashThe owner withdraws $2,000 cash from the business for personal use. What is the effect on the accounting equation?easy
- 7Account Identification: Which Account Is a Liability?Which of the following accounts is a LIABILITY?easy
- 8Accounting Equation Example: Receiving a Bank LoanA business borrows $15,000 from a bank and receives the cash. What is the effect on the accounting equation?easy
- 9Accounting Equation Problem: Equity After Changes in Assets and LiabilitiesAt the start of the year a business had assets of $90,000 and liabilities of $40,000. During the year assets rose by $25,000 and liabilities rose by $10,000. What is equity at the end of the year?medium
- 10Expanded Accounting Equation: How Paying an Expense Affects EquityA business pays $700 of wages in cash. In the expanded accounting equation, the effect is:medium
- 11Accounting Equation Problem: Net Income from the Change in EquityOwner’s equity was $40,000 at the start of the year and $58,000 at the end. During the year the owner invested a further $5,000 and withdrew $9,000. What was net income for the year?medium
- 12Accounting Transactions That Leave the Accounting Equation Totals UnchangedWhich transaction leaves total assets, total liabilities and total equity ALL unchanged?medium
- 13Accounting Equation Example: Buying Equipment Part Cash, Part LoanA business buys equipment for $10,000, paying $4,000 in cash and financing the remaining $6,000 with a loan. What is the NET effect on the accounting equation?medium
- 14Is This an Accounting Transaction? Events That Are Not RecordedWhich of the following events is NOT recorded as an accounting transaction on the day it happens?medium
- 15Account Type Quiz: Asset, Liability, Equity, Revenue or Expense?Which answer correctly classifies Inventory, Interest Payable and Rent Income, in that order?medium
- 16Accounting Equation: Effect of an Unpaid Utility BillA business receives a $350 electricity bill for the month just ended and will pay it next month. What is the effect on the accounting equation now?medium
- 17Accounting Equation Problem: Total Assets After Four TransactionsA business starts with assets of $50,000 and liabilities of $20,000. It then (1) buys $8,000 of equipment on credit, (2) earns $6,000 of revenue in cash, (3) pays $2,500 of expenses in cash, and (4) repays $3,000 of a loan. What are total assets afterwards?hard
- 18Accounting Equation Problem: A Net Loss While Total Assets IncreaseIn one year a business made a net loss of $4,000. The owner made no investments or withdrawals, yet total assets increased by $6,000. What happened to total liabilities?hard
- 19Accounting EquationWhich of the following correctly states the accounting equation?easy
- 20Buying Equipment for Cash — Effect on the EquationA company buys equipment for $15,000 cash. The effect on the accounting equation is:easy