Question

1) Paying debt principal with cash:

a) reduces net worth b) increases net worth c) doubles net worth d) has no impact on net worth e) None of the choices listed

2) If your starting net worth is $20,000, how much will you be worth after the following transactions: earn salaries of $3,000, pay living expenses of $2,000, borrow $5,000 and pay interest of $300? a) $20,700 b) $15,700 c) $28,000 d) $23,700 e) None of the choices listed

3) Paying cash for entertainment: a) involves two entries to the income statement b) involves an entry to the balance sheet and an entry to the income statement c) involves two entries to the balance sheet d) involves two entries to the balance sheet and one entry to the income statement e) None of the choices listed

4) Which of the following has an impact only on the balance sheet? a) Reducing the principal portion of a car loan b) Paying the interest portion of a car loan c) Depositing interest received on savings d) Paying insurance expense e) None of the choices listed

5) Which of the following forms of organizations has only one owner? a) Corporation b) Proprietorship c) Partnership d) Co-operative e) None of the choices listed

6) When operating as a proprietary business, which of the following is true? a) All debt in the business may or may not be the responsibility of the owner which will depend on accounting policies b) All the business debt is considered as the owners debt c) All the business debt is not the responsibility of the owner because they are separate entities d) It is common practice to keep the business and personal records together because the owner and the business are considered as one e) None of the choices listed

7) When an owner of a proprietary business withdraws cash from the business for personal use, how would the action impact the balance of cash and owner’s equity? a) Decrease cash, decrease owner’s equity b) Decrease cash, no change to owner’s equity c) Decrease cash, increase owner’s equity d) Increase cash, decrease owner’s equity e) None of the choices listed

8) A business pays for August travel expenses using a credit card that is due for payment in September. Which of the following is correct? a) In August, increase travel expense, increase accounts payable b) In August, decrease travel expense, decrease accounts payable c) In September, increase travel expense, increase accounts payable d) In September, decrease travel expense, decrease accounts payable e) None of the choices listed

9) Which of the following would you not find on the financial statements of a business? a) Net Worth b) Cash c) Property, Plant and Equipment d) Owner's Equity e) None of the choices listed

10) Examples of assets include: a) cash, prepaid expenses, unearned revenue b) cash, accounts receivable, salaries expense c) cash, accounts receivable, unearned revenue, revenue d) cash, accounts receivable, office supplies, accumulated depreciation e) None of the choices listed

Answer 1