5) Assets are $150,000 and total liabilities are $90,000. Total stockholders' equity will be:
A) $180,000.
B) $300,000.
C) $240,000.
D) $60,000.
6) Assets are $270,000 and stockholders' equity is $90,000. Liabilities will be:
A) $60,000.
B) $360,000.
C) $270,000.
D) $180,000.
7) A business performs services for its customers. Payment is expected to be received next month. How does the performance of services affect the accounting equation?
A) Liabilities increase; stockholders' equity decreases.
B) Assets increase; stockholders' equity increases.
C) Assets decrease; stockholders' equity decreases.
D) Assets increase; stockholders' equity decreases.
8) A business receives a bill for services rendered from one of its suppliers. The business will pay the supplier next month. When the business receives the bill from its supplier, how does this affect the accounting equation?
A) Assets decrease; stockholders' equity decreases.
B) Liabilities increase; stockholders' equity decreases.
C) Assets increase; liabilities increase.
D) Liabilities increase; stockholders' equity increases.
9) A business settles a liability by making a payment with cash. How does paying this liability affect the accounting equation?
A) Assets decrease; liabilities decrease.
B) Liabilities decrease; stockholders' equity increases.
C) Assets increase; liabilities increase.
D) Assets increase; liabilities decrease.
10) A corporation pays cash dividends. How does the payment of these dividends affect the accounting equation?
A) There is no effect on the assets, liabilities, or stockholders' equity.
B) Assets decrease; stockholders' equity decreases.
C) Assets increase; liabilities decrease.
D) Assets decrease; stockholders' equity increases.
11) Equipment is sold for cash in an amount equal to the cost of the equipment recorded on the books. How does this sale affect the accounting equation?
A) One asset increases; one asset decreases.
B) Assets increase; liabilities increase.
C) Assets increase; liabilities decrease.
D) Assets increase; stockholders' equity increases.
12) The business receives cash from a customer that is owed to company "on account," based on services rendered to the customer previously. How does the collection of the cash affect the accounting equation?
A) Assets increase; stockholders' equity increases.
B) Assets increase; liabilities increase.
C) One asset increases; one asset decreases.
D) Assets decrease; stockholders' equity decreases.
13) Land was originally purchased for $20,000. It is sold for $20,000 in cash. How does the sale affect the accounting equation?
A) Assets increase $20,000; liabilities decrease $20,000.
B) Assets increase $20,000; liabilities increase $20,000.
C) Assets increase $20,000; stockholders' equity increases $20,000.
D) Assets increase $20,000; assets decrease $20,000.
14) Land is purchased by the company for $100,000. The company pays for land with a $20,000 cash payment and the execution of an $80,000 promissory note payable to the seller. How does this purchase affect the company's accounting equation?
A) Assets increase $80,000; liabilities decrease $20,000.
B) Assets increase $20,000; liabilities decrease $80,000.
C) Assets increase $80,000; stockholders' equity increases $80,000.
D) Assets increase $80,000; liabilities increase $80,000.