MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1 Which of the following is correct? 1 A Assets Liabilities Capital 9,550 1,150 8,200 B Assets Liabilities Capital 7,850 1,250 6,600 C Assets Liabilitie

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is correct? 1) A) Assets Liabilities Capital £9,550 £1,150 £8,200 B) Assets Liabilities Capital £7,850 £1,250 £6,600 C) Assets Liabilities Capital £5,420 £6,540 £1,120 D) Assets Liabilities Capital £8,200 £2,800 £11,000 2) Which of the following equations is correct? 2) A) Capital = Assets - Liabilities B) Liabilities - Capital = Assets C) Capital = Assets + Liabilities D) Assets + Capital = Liabilities 3) Which of the following is an asset of a firm? 3) A) Machinery owned by the firm. B) An overdrawn balance on the firm's bank account. C) Money owed by the firm to one of its suppliers in respect of goods purchased on credit. D) The capital of the firm. 4) The following is a list of the assets and liabilities of a firm at a particular date. Premises owned by the firm £20,000 Money owed by the firm to its Accounts payable £3,000 Inventory owned by the firm £8,500 Loan received by the firm from a bank £4,000 Cash in the firm's safe £100 The firm's capital at that date is: 4) A) £32,400 B) £21,100 C) £21,600 D) None of the above. 5) Which of the following is a liability of a firm? 5) A) Money owed to the firm by its accounts receivable. B) A building owned by the firm. C) Cash in the firm's safe. D) Money which the firm has borrowed and has not yet repaid. 1 Chapter 1 Business Accounting Volume 1 12e Frank Wood (Test Bank All Cha pters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

6) When a firm pays one of its Accounts payable by cheque, the effect on its assets and liabilities is: 6) A) Effect upon Assets Effect upon Liabilities Increase bank Increase Accounts payable B) Effect upon Assets Effect upon Liabilities Reduce bank Reduce Accounts payable C) Effect upon Assets Effect upon Liabilities Reduce bank Increase Accounts payable D) None of the above. 7) The effect on a firm's assets and/or liabilities as a result of it being granted a bank loan and the amount of the loan being transferred into its bank current account is: 7) A) Effect upon Assets Effect upon Liabilities Decrease bank Decrease loan B) Effect upon Assets Effect upon Liabilities Increase bank Increase loan C) Effect upon Assets Effect upon Liabilities Decrease bank Increase loan D) None of the above 8) When a firm lodges money which it received from one of its accounts receivable, the effect on its assets and/or liabilities is: 8) A) Effect upon Asset Effect upon Assets or Liabilities Increase Inventory Decrease capital B) Effect upon Asset Effect upon Assets or Liabilities Reduce bank Reduce Accounts payable C) Effect upon Asset Effect upon Assets or Liabilities Increase cash Decrease loan D) Effect upon Asset Effect upon Assets or Liabilities Increase bank Decrease accounts receivable 2 2 / 4

9) The effect on a firm's assets and/or liabilities as a result of it buying goods on credit is: 9) A) Effect upon Assets Effect upon Liabilities Reduce bank Reduce accounts payable B) Effect upon Assets Effect upon Liabilities Increase inventory Increase accounts payable C) Effect upon Assets Effect upon Liabilities Increase cash Decrease loan D) Effect upon Assets Effect upon Liabilities Increase cash No effect 3 3 / 4

Answer Key Testname: CHAPTER 1 1) B 2) A 3) A 4) C 5) D 6) B 7) B 8) D 9) B 4

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