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The correct answer of this Multiple Choice Question (MCQ) is D), as the Net Worth is the difference total assets minus total liabilities. It is calculated from the following Accounting Equation : Net Worth (Owner's Equity Or Capital)  =  Total Assets - Total Liabilities (Rights of Outsiders) Net worth is the rights of the owner against the assets of the business. The more the customer has assets greater than total liabilities, the more stronger' net worth (positive net worth) of the customer has during the period. However, negative net worth (liabilities are greater than assets) indicates that the business is unable to meet its external and internal liabilities which is not a good sign for running a smooth business. Assets are owned, possessed and controlled by the customer's business are enforced by valid claims against the rights from outsiders and owner of the business while liabilities are debts due which are payable to outsiders against the assets of the business....

When the company or employer gives An Asset to an employee as a gift , then there is no proceeds i.e., cash is not received. In this journal entry, the asset is credited with original cost or historical cost and accumulated depreciation is debited upto the full use of assets during the accounting period. The difference is the Non Operating Expense / Income. Example: ABC company gives a laptop of $5000, purchased on 1st January, 2022 with useful life of 10 years with no residual value, to an employee, Mr. A. The laptop gifted to employee on 1st January, 2024. The Method of Depreciation is straight- line method with rate of depreciation is 10%. Record the journal entry in the book of ABC company for the laptop gifted to Mr. A on 1st January, 2024. Given: Cost of Laptop = $5000 Useful Life = 10 Years Depreciation Method = Straight-Line Rate of Depreciation = 10% Calculation: Straight-Line Depreciation = Cost of Laptop - Residual Value / Useful Life       = $5000 - 0...

The correct choice this Multiple Choice Question (MCQ) is a), as Expenses are the results of utilizing of services. For example, if the company paid Rent Expenses for the month, then it is possible for the company / corporation to run the business and provides its services to clients and earns revenues during the accounting period. Without paying rent expenses and other expenses the business can't be carried on and as a result services can't be consumed or performed. Other options of this mcq are incorrect. Using up Liabilities resulted in a debit to liabilities account and a credit to cash account or bank account. Purchasing assets resulted in a debit to assets account and credit to cash or accounts payable account, so it is not the right choice. Expenses decrease Owner's Equity while Revenues increase Owner's Equity. So, expenses are very important to incur to earn revenue for the business.

The correct answer of this question is (C), as by using the formula of Cost of Goods Sold (Cost Of Sales) , we get the value of $25,000 as shown below: Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory Inventory of the beginning of the year is called Beginning Inventory while Inventory on 31st December is called Ending Inventory which is the goods remain unsold at the end of the accounting year. Given: Here Opening / Beginning Inventory = $10,000  |  Purchases for the year = $20,000 |  Closing / Ending Inventory = $5,000 By putting the values in the above formula, we have: Cost of Goods Sold = $10,000 + $20,000 - $5,000 Cost of Goods Sold = $25,000 So, the cost of sales for the period is $25,000.

This statement is “False” as the Current Ratio is calculated by dividing Current Assets by Current Liabilities .    Current Ratio  =   Current Assets / Current Liabilities Current assets include Cash and Cash Equivalents, Accounts Receivables, Prepaid Expenses and Accrued Revenues Current liabilities include Accounts Payable, Accrued Expenses / Outstanding Expenses and Unearned Revenues. Current ratio is expressed in terms of percentage. Example: A company doing a retail business. From the financial statement of the company, Current Assets are $3000, Current Liabilities are $200. What is the current ratio? Given:                  Current Assets = $3000 | Current Liabilities = $2000 Find: Current Ratio = ? We know the formula as shown below:                               Current Ratio =  Current Assets / Current Liabilities   ...

The correct answer of this multiple choice question is A, as we made disbursements by check / cheque i.e., the Cash is paid out either to purchase goods or services or paid to suppliers / vendors for goods or services purchased on credit / account. The possible entries to record for disbursements by check are shown below (a) If Goods Or Services Purchased By Check / Cheque                       Purchases a/c  XXX                                                   Cash a/c  / Bank a/c  XXX                  (Disbursements Made By Check To Buy Goods Or Services) a) If Payments Made To Vendor                             Accounts Payable a/c  XXX         ...

Solution To True Or False Question With A Simple Example The statement is “False”, as when Collection from Receivable is made, then there is an increase in cash account, which is a Current Asset , due to which total assets increase but at the same time, Accounts Receivable , which is a Current Asset, is decreasing which decreases total assets. So the total assets remain unchanged due to increase in cash account and decrease in account receivable account with an equal amount. Example: The company received cash of $5,000 from its customer. The entry to record is to debit cash account of $5,000 and credit Account Receivables of $5,000. From Accounting Equation, we have: Change In Total Assets  = Increase In Assets (Cash)  -  Decrease In Assets (Account Receivable)    Change In Total Assets  =              $5,000                       -      ...