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

Question

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

Q.15. C. Cash

Expanation- Cash and cash equivalents- it is the most liquid asset.

Q.16.B. Decrease of $3000

Explanation- The Accounting equation is Asset = Liabilities + Owner's Equity

Owner's Equity= Asset - Liabilities

Owner's Equity = $2000 - $5000 = -$3000

Q.17.A. Accounts Payable

Q.19. D. Liabilities

Explanation- Liabilities are existing debts that your business ownes to another businesss, organisation or vendors.

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