Question

1.Which of the following transactions will affect the balance of? Owner, Capital?
A.
collection on account
B.
paid accounts payable
C.
paid rent expense for the month
D.
purchased land for cash

2..Which of the following appears on both the income statement and statement of? owner's equity? A. Net income B. ?Owner, Capital, ending balance C. Total revenues D. ?Owner, Withdrawals

3.A liability created when a business receives cash from customers in advance of providing services or delivering goods is called? a(n) ________.
A.
notes receivable
B.
unearned revenue
C.
accrued liability
D.
service revenue

Answer 1

Answer- 1:

Collection on an account, paid on accounts and purchase of land are the transactions that affect the accounts appearing in the balance sheet.

Rent Paid for the month will affect the income of the business along with cash position. It will affect the balance of owner’s capital due to change in net income.

Hence, Option C is right.

Answer- 2:

Owner’s capital ending balance appears in balance sheet only, Total revenue is reported in income statement and withdrawal by owner is reduced from owner’s capital.

Net income appears in the income statement (Total revenue – Total expenses) and balance sheet as addition to the owner’s capital.

Hence, Option A is correct.

Answer- 3:

Notes Receivable represent amount due from others to business. Accrued liability represents the expense that has been incurred but not yet paid. Service revenue is primary income earned from rendering services.

Unearned revenue represents the amount received in advance from customers in the promise of providing goods or services.

Hence, Option B is correct.

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