Question

_{1.) If at the end of the accounting period the assets total $8,000, and the liabilities total $5,000, then what must be the amount of equity?}

_$3,000

_$4,000

_$5,000

_$1,000

_{None of the above}

_2.)

_{If at the end of the accounting period the liabilities total $6,000, and equity totals $10,000, then what must be the total of the assets?}

_$16,000

_$14,000

_$15,000

_$11,000

_{None of the above}

_3.)

_{Which of the following financial statements does not cover a period of time?}

_{Income Statement}

_{Balance sheet}

_{Statement of retained earnings}

_{Statement of cash flows}

_{All of the above}

_4.)

_{Which of the following is true about ethics in accounting?}

_{For information to be useful, it must be trusted.}

_{Ethics are beliefs that distinguish right from wrong.}

_{They are accepted standards of good and bad behavior.}

_{Identifying the proper ethical path is sometimes difficult.}

_{All of the above}

_5.)

The investment of cash in the business will result in which of the following?

An increase in cash and a decrease in equity

An increase in cash and an increase in equity

A decrease in cash and an increase in equity

An increase in fees earned and an increase in equity

A decrease in cash and a decrease in equity

6.)

_{Keith Manich deposited $5,000 in a bank account he established for a pet store that he is going to own and operate as KM's Pets, Incorporated. Recording the deposit will result in which of the following changes to the components of the accounting equation?}

_{Increase in an asset and increase a liability}

_{Decrease in an asset and decrease a liability}

_{Increase in an asset and increase equity}

_{Decrease in an asset and decrease equity}

_{Increase in one asset and decrease in another asset}

Answer 1

1)

Assets = $8,000

Liabilities = $5,000

Equity = Assets - Liabilities

= 8,000 - 5,000

= $3,000

Correct option is (a)

2)

Assets = Liabilities + Stockholders' equity

= 6,000 + 10,000

= $16,000

Correct option is (a)

3)

Balance sheet does not cover a period of time. It is prepared at a point of time. It shows assets, liabilities and stockholders' equity at a particular day.

Correct option is (b)

4)

Following is true about ethics in accounting

_{- For information to be useful, it must be trusted.}

_{- Ethics are beliefs that distinguish right from wrong.}

_{- They are accepted standards of good and bad behavior.}

_{- Identifying the proper ethical path is sometimes difficult}

Correct option is (e)

5)

The investment of cash in the business will result in an increase in cash and an increase in equity.

Correct option is (b)

6)

Keith Manich deposited $5,000 in a bank account he established for a pet store that he is going to own and operate as KM's Pets, Incorporated. Recording the deposit will result in Increase in one asset and decrease in another asset.

Correct option is (e)