SW 2 17/20

A company paid cash for an amount owed to a creditor. This transaction decreased cash and: =
decreased liabilities.

A company's balance sheet shows: cash P22,000, accounts receivable P16,000, office
equipment P50,000, and accounts payable P17,000. What is the amount of owner's equity? =
P 71,000. (17k, 105k, 29k, 88k)

A receipt of a portion of an accounts receivable will = not affect total assets

A transaction caused a $15,000 decrease in both total assets and total liabilities. This
transaction could have been: = Repayment of a $15,000 bank loan.

Al Shea is a stockholder and operator of SawTooth Company. As of the end of its accounting
period, December 31, 2007, SawTooth Company has assets of P925,000 and liabilities of
P285,000. During 2008, Al Shea invested an additional P50,000 in exchange for capital stock
and was paid dividends in the amount of P30,000 from the business. What is the amount of net
income during 2008, assuming that as of December 31, 2008, assets were P980,000, and
liabilities were P255,000? = P725,000 (95k, 65k, 165k)

An example of an external event would not include: = Depreciating equipment.

At October 1, 2008, Deet Industries had an accounts payable balance of P30,000. During the
month, the company made purchases on account of P25,000 and made payments on account
of P40,000. At October 31, 2008, the accounts payable balance is = P15,000 (30k, 40k, 10k)

At September 1, 2008, Foli Co. reported owner's equity of P136,000. During the month, Foli
generated revenues of P20,000, incurred expenses of P12,000, purchased equipment for
P5,000 and withdrew cash of P2,000. What is the amount of owner's equity at September 30,
2008? = P142,000 (136k, 137k, 8k)

At the end of the current accounting period, account balances were as follows:  Cash,
P150,000; Accounts Receivable, P50,000; Common Stock, P10,000; Retained Earnings,
P60,000.  Liabilities for the period were: = P130,000 (140k, 80k, 190k)

Consider the following transactions:

I      Owners invested P3,000 cash to begin the business
II      Provided services for cash, P2,500
III      Provided services on account, P4,000
IV      Paid cash for expenses, P3,500
How much net income did the business have?
= P3,000 (2.5k,4k,6k)

Consider the following transactions:

•      Owners invested P8,000 cash to begin the business
•      Provided services for cash, P6,000
•      Provided services on account, P4,000
•      Paid cash for expenses, P7,500
How much cash does the business have?
= 6,500 (2.5k,10.5k,4.5k)

During the current year, liabilities of Angelino's Store increased by P210,000, and owners'
equity increased by P140,000. = Assets increased during the year by P350,000.
During the month of March, Cooley Computer Services made purchases on account totaling
P43,500.  Also during the month of March, Cooley was paid P8,000 by a customer for services
to be provided in the future and paid P36,900 of cash on its accounts payable balance.   If the
balance in the accounts payable account at the beginning of March was P77,300, what is the
balance in accounts payable at the end of March? = P83,900 (4.9k,6.6k,75.9k,91.9k)

During the year, the assets of Weber Consulting increased by P145,000 and the liabilities
decreased by P35,000.  If stockholders' equity is P395,000 at the end of the year, the
stockholders' equity at the beginning of the year must have been = P285,000 (505k,215k,575k)

Examples of internal transactions include all of the following except: (M) = Paying wages to
company employees.

If a company has a profit: = Assets will be equal to liabilities plus owners' equity.

If assets are P365,000 and equity is P120,000, then liabilities are: P245,000

If assets increase P120,000 during a given period and liabilities decrease P25,000 during the
same period, stockholders' equity must: = increase P145,000

If equity is P300,000 and liabilities are P192,000, then assets equal: = P492,000

If the liabilities of a business increased P75,000 during a period of time and the owner's equity
in the business decreased P30,000 during the same period, the assets of the business must
have: = Decreased P45,000.