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The correct answer of this multiple choice question is (A). Decrease Owner’s Equity. Brief Explanation Of MCQ Question: Expenses , (Expenses = Revenues - Profit), are incurred by the business to run the business in order to earn profits out of the profitable activities of the owner of the business. Hence, we say that expenses are related with the daily operating activities of the business. So, to run the business, expenses (Outflows Of Cash From Business) paid by the business will surely decrease Owner’s Equity  but to profitable activities, the business earns profits or Revenues (Inflows Of Business) are greater than expenses. So, Expenses decrease Owner's Equity but Revenues and Profits / Income increase Owner's Equity.

The correct answer is (C) $83,500 Increase, as increase in total assets by $70,000 plus decrease in total liabilities by $13,500 amount equal to $83,500 increase in Owner’s Equity during the year as shown from the below Accounting Equation :                    Assets    =   Liabilities   +         Owner’s Equity                    +70,000    =   -$13,500    +   Change In Owner’s Equity   Change / Increase In Owner’s Equity = +$70,000 + $13,500 = $83,500 Increase

The correct answer is (A) $60000 Decrease, as decrease in total liabilities by $75000 plus (+) increase in stockholders’ equity by $15000 equal to $60000 Decrease in total assets during the same accounting period as it is proved from below Accounting Equation :              Assets                       =    Liabilities    +   Stockholders’ Equity     Change In Total Assets    =   -$75000        +              (+$15000)   Change / Decrease in Total Assets   =   -$75000      +      $15000 As We Know: (-$75000 + $15000 = $60000)   Change / Decrease in Total Assets = $60000 Decrease

The correct answer of this MCQ is (c), as to equalize Accounting Equation i.e., Assets = Liabilities + Stockholders’ Equity ), we either have to increase total assets by $8000 or we have a choice to decrease stockholders’ equity by $8000. (a). To prove it, firstly, we choose “Assets must be increased by $8000”. By applying accounting equation, we get:    Assets       =       Liabilities     +           Stockholders’ Equity Change In Assets = Change In Liabilities + Change In  Stockholders’ Equity   +$8000      =         +$8000        +   Change In Stockholders’ Equity     +$8000      =         +$8000        +                             0 Change In Stockholders’ Equity = +$8000 - $8000 = 0 Hence, the accounting equation is in balance i.e., Left side is equal to right side. (b). Now, we must “Decrease Stockholders’ Equity by $8000”. As we know:                                 Assets                  =     Liabilities    +   Stockholders’ Equity Putting the value in ac

The correct answer is (b). $20100 decrease as decrease in total liabilities by $49600 plus increase in Stockholders’ Equity or owner’s equity ($29500) equal to $20100 decrease in total assets during the same accounting period as shown from below Accounting Equation :               Assets                    =      Liabilities      +     Stockholders’ Equity   Change In Total Assets      =        -$49600       +          (+$29500)   Change / Decrease In Total Assets = $20100 Decrease

The correct answer is (c). $25000 increase, as increase in total liabilities by $20000 plus increase in Owners’ Equity by $5000 during the same period equal to $25000 increase in total assets as shown from below Accounting Equation :             Assets                     =     Liabilities    +   Owner’s Equity As, we know: Change In Total Assets =  Change In Total Liabilities + Total Owner’s Equity So, we have the following results as shown below: Change In Total Assets    =      +$25000     +   (+$5000)   Change / Increase In Total Assets = $25000 Increase

Given That: Change In Total Assets = $29000 Decrease, Change In Total Owner's Equity = $23000 Increase Find: Change In Total Liabilities = ? Solution: The change in total liabilities is $52000 decrease, as decrease in total assets (-$29000) minus increase in Owner’s Equity (+$23000) during the same period is equal to $52000 decrease in total liabilities as proved from below Accounting Equation :               Assets     =    Liabilities                     +   Owner’s Equity             -$29000    =   Change In Liabilities   +       (+$23000) Change / Decrease In Total Liabilities = -$29000 - $23000 = $52000 Decrease

The correct answer is (c). $8,000 increase., as increase in total assets (+$20000) minus increase in total liabilities (+$12000) equal to $8000 increase in Owner’s Equity during the same accounting period as it shows from the below Accounting Equation :             Assets      =     Liabilities     +          Owner’s Equity           +$20000    =      +$12000      +     Change In Owner’s Equity Change Or Increase In Owner’s Equity = +$20000 - $12000 = $8000 increase in owner’s equity in the same period

Solution To The Problem The answer of this short question is that total assets increased by $20000 as decrease in total liabilities (-$20000) plus increased in Owner’s Equity (+$40000) equal to increase in total assets by $20000 during the same accounting period as it is proved from Accounting Equation as shown below:           Assets             =         Liabilities     +     Owner’s Equity Change In Assets    =         -$20000       +          (+$40000) Change / Increase In Total Assets  = $20000 Increase

The correct answer of this multiple choice question is (d). $153000 decrease, as decrease in total assets (-$88000) minus increase in owner’s equity (+$65000) equal to $153000 decrease in total liabilities during the same time period. To prove it, we use Accounting Equation as shown below:         Assets             =         Liabilities                  +     Owner’s Equity       -$88000            =    Change In Liabilities    +          (+$65000) Change / Decrease In Total Liabilities = -$88000 - $65000 = $153000 decrease

Answer Of MCQ The correct answer is (c). $5000 increase, as from Accounting Equation , decrease in total liabilities (-$25000) plus increase in owner’s equity (+$30000) equal to $5000 increase in total assets during the same accounting period as show below:       Assets            =     Liabilities      +    Owner’s Equity As, we know that: Change In Assets = Change In Liabilities +  Change In Owner’s Equity So, we have: Change / Increase In Assets  =   -$25000       +        (+$30000) Change / Increase In Assets  = +$5000

The correct answer is (d). $8000 increase, as from Accounting Equation , increase in total liabilities ($14000) minus decrease in Owner’s Equity ($6000) equal to $8000 increase in total assets during the same accounting period as shown below:                                   Assets      =       Liabilities    +    Owner’s Equity Change / Increase In Assets  =        +$14000    +         (-$6000) Change / Increase In Assets  = $8000 Increase

The correct answer is (C), as cash invested into the business increased the asset side of Accounting Equation as Cash is coming into the business and also increased the Capital (money invested into the business), which ultimately increased the Owner’s Equity on the right side of accounting equation as the rights of owner of the business against assets of the business are also increased.’’ When the owner (Paul) invested Cash in his business, then following Journal Entry is recorded as shown below:                                                                Cash a/c  XXX                                                                                    Capital a/c  XXX                                                            (Cash Invested Into The Business)

The correct answer is B), as the Adjusting Entry (debit Depreciation Expense, $150; credit Accumulated Depreciation, $150) for the period of one month (December), in which accounting period is ended, is recorded and depreciation per month is $150 (1800/12).

When To Record Sales Revenue Under Accrual Basis Of Accounting And Cash Basis Of Accounting The correct answer is (c), as according to Accrual Basis of Accounting , we record Sales Revenue when it has been earned by the company during the current accounting period whether the cash is received or not. However, under Cash Basis of Accounting, sales revenue is only recorded when cash is received or collected.

The correct answer of this multiple choice question (MCQ) is (C). Explanation: As we know that Accounting Equation shows the equality of total of Assets with the equality of total Liabilities plus Owner’s Equity. In equation form, we have:                                              Assets      =        Liabilities     +      Owner’s Equity                                             +$8000      =           -$2000        +      Owner’s Equity Change / Increase In Owner’s Equity Amount    = +$8000 + $2000 = +$10000 So, the owner’s equity has increased by $10000.

The journal entry to record is to debit Gas and Oil Expenses Account, as these Expenses are incurred so these are increased, and credit Cash Account, as when the cash is paid, it is decreased because it is going out of the company’s business. Journal En t ry:                                                       Gas And Oil Expenses a/c  160                                                                                                         Cash a/c 160                                                               (Paid Gas And Oil Expenses For Cash)

You May Also Be Interested In “ Closing Entry Process ” The correct answer of this multiple choice question is (c), as to close Management Fee Revenue, we debit it as it has normal credit balance, so to close management fee revenue account we debit it and close it by a debit in Retained Earnings Account. The entry to close management fee revenue account is shown below:             Management Fee Revenue a/c   XXX                                                              Retained Earnings a/c  XXX                                            (Management Fee Is Closed To Retained Earnings Account) When management fee revenue account is closed by transferring it to Retained Earnings Account, it is zero out or has no balance since it is a temporary account. All the expense and revenue accounts are temporary accounts and closed at the end of the accounting period. In T-Account of Retained Earning, we record the above entry as shown below:                                              

Solution To The MCQ Question You May Also Be Studied About, “ Credit Balance In Debtors / Accounts Receivable Control Ledger Account ” The correct answer is (a) i.e., Current Liabilities  (which is recorded on balance sheet under Current Liabilities Section on Liabilities & Equity Side), as the company received more than the amount due from customers due to overpayments by customers by mistake, defective goods returned by the customers after making payment, or due to some other reasons. So, the company is liable to pay to customers for the amount received in excess of due amount. Usually, Accounts Receivable or Sundry Debtors' normal balance is debit but it may be credit due to some reasons. In this case, it is a liability for the company to refund the extra amount received than the original invoice price. For example, if Mr. A, a customer, after making payment of $300 for goods sold to him by the company found that the goods are not according to the order specified, then