Extracted text: EXERCISE 2.1 Test 1. Multiple Choice. Encircle ihe correct answer from the given choices 1. The difference between assets and liabilities is Total assets b. 8. Total Sabilities O Equity Cash 2. The issuance of a note by an entity for services received should be recorded as a. A notes payable. b. A prepaid expense. An accounts receivable. d. C. An unearned income. 3. Which of the following is an intangible asset? a. Copyrights b. Patents Trademarks d All of the above 4. The expectation of a future payment from a customer for goods sold is A notes receivable. b. A prepaid expense. An accounts receivable. d. All of the above. a. C. 5. This account records long-term debt of the business entity for which it has pledged certain assets as security. a. Accounts payable b. Bonds payable C. Mortgage payable d. Notes payable 6. Which of the following is correct? Liabilities P1,250 P2,800 P1,150 P6,540 Capital P6,600 P11,000 P8,200 P1,120 Assets a. P7,850 b. P8,200 P9,550 d. P5,420 C. 7. Another way of stating the accounting equation is Assets + Liabilities = Owner's Equity Assets - Liabilities Owner's Equity Assets = Owner's Equity - Liabilities Owner's Equity + Assets = Liabilities 8. Which of the following is an asset of the firm? C. d. An overdrawn balance on the firm's bank account. b. Computer equipment owned by the firm. c. Money owed by the firm to one of its suppliers in respect of goods purchesed on credit d. The capital of the firm. a. 9. The following can be found in an income statement except a. Assets b. Expenses c Income d. Profit or loss 10. Which of the following is not subject to depreciation? a Building b. Equipment Land C. d. Machinery 11. Which of the following is a liebility of a finm? a. A building owned by the firm. b. Cash in the firm's safe. C. Money which the fim has borrowed and has not yet repaid d. Money owed to the firm by its debtors.
Extracted text: Decrease in economic benefits during the acpounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decrease in equity. b. Decrease in owner's equity. c. Increase in owner's equity. d. Inflows of assets from delivering or producing goods or rendering services. 12. Expenses can be defined as 13. Inventories are assels which are a Held for sale in the ordinary course of business. D. In the form of materials or supplies to be consumed in the production process or in the rendering of services c In the process of production for such sele. d. All of the above. 14. Obligations which are expected to be liquidated through the use of existing current assets or the creation or oiner current liabilities are celled a. Current assets. b. Current liebilities. C. Long-term liabilities. d. Uneamed revenue. 15. Which of the following is a form of revenue? a. A cash purchase invoice b. A check paying a mortgage C. A check paying utilities d. A credit purchase invoice Credit sales to charge customers 16. The accounting equation is used to determine the amount of income eamed during the period b. is used to determine the emount of liabilities owed Shows the claims on the entity's asseis by both the creditors and owner d. Shows the claims on the owner's equity by the creditors 8. C. 17. A current asset which includes coins, currencies, and bank deposits is called a Accounts receivable b. Cash Cash equivalents c. d. Notes receivsble 18. All of the following affect the owner's equity account except a. Additional investment b. Original investment C Payment of a liability d Withdrawal by the owner 19. The components. of the balence sheet equation are a Assets, income, and owner's equity. b. Assets, liabilities, and owner's equily. c. Income, expenses, and profit. d. Investments, withdrawals, and profit. 20. Which of the following transactions does not include an increase to expenses? a Bought medical supplies for cash b. Bought office supplies on account. C. Paid the week's salaries. d. Received and paid the phone bill. e Received cash for services performed.