MULTIPLE CHOICE QUESTIONS D. $26,000 15. Which of the following is the most liqu

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MULTIPLE CHOICE QUESTIONS

D. $26,000 15. Which of the following is the most liquid asset? A. Marketable securities B. Inventories C. Cash D. Fixed asset 16. If assets are increased by 2,000S and liabilities are decreased by 5,000s. How much is the change on owner's equity? A. An increase of 3,000 B. A decrease of 3,000 C. An increase of 7,000 D. A decrease of 7,000 17. When a liability is paid, which account should be credited? A. Accounts payable B. Accounts receivable C. Expense D. Cash 18. When a gain is realized in an exchange between equipment (Cash is given as a boot), which of the following account should not be recorded? A. The new equipment B. Gain on the exchange C. The old equipment D. Cash 19. Debts owed by a business to the creditors are referred to as A. accounts receivables B. expenses C. owner's equity D. liabilities 20. A customer buys undeemed consumer cards worth 300S. For the sellor, the 3008 is the A. Unearned revenue B. Prepaid expense C. Accrued Revenue D. None of the above 38

Explanation / Answer

15. Which of the following is the most liquid asset? Cash is the most liquid assets that doesn’t involve a single step to convert any liquid form before to be expensed. A.   Marketable securities B.   Inventories Ans C.   Cash D.   Fixed asset 16.   If assets are increased by 2,000$ and liabilities are decreased by 5,000$. How much is the change on owner's equity? Assets increased (2000)+ liability decreased(5000) = $7000 A.   An increase of 3,000 B.   A decrease of 3,000 Ans C.   An increase of 7,000 D.   A decrease of 7,000 17.   When a liability is paid, which account should be credited? Liability is debited for payment and cash is credited A.   Accounts payable B.   Accounts receivable C.    Expense Ans D.   Cash 18.    When a gain is realized in an exchange between equipment (Cash is given as a boot), which of the following account should not be recorded? gain on exchange is adjusted in new assets received, so not recorded. A.   The new equipment Ans B.   Gain on the exchange C.   The old equipment D.   Cash 19.   Debts owed by a business to the creditors are referred to as Debt is another name of liability. A. accounts receivables B. expenses C.   owner’s equity Ans D.   liabilities 20. A customer buys undeemed consumer cards worth 300$. For the sellor, the 300$ is the Since consumer cards are undeemed and will be deemed as earned when utilised, so only unearned revenue is recorded. Ans A.   Unearned revenue B.   Prepaid expense C.   Accrued Revenue D. None of the above

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