Reference no: EM132837096

Problem 1: If assets = $180,000 and owners' equity = $145,000, then the liabilities must equal:

a) $ 25,000.

b) $ 35,000.

c) $ 45,000.

d) $ 325,000.

Problem 2: What is the effect on the accounting equation for the following transaction:

Equipment costing $4,000 is purchased on account/credit.

a) Assets increase by $4,000; Liabilities decrease by $4,000.

b) Assets increase by $4,000; Liabilities increase by $4,000.

c) No overall effect.

d) None of the above.

Problem 3: Which of the following would not be a finding as the result of an audit?

a) That the financial statements are presented fairly.

b) That the financial statements are completed and accurate.

c) That the owner(s) of the business are honest individuals.

d) All of the above.

Problem 4: Which of the following financial statement shows the sources and uses of cash?

a) The Balance Sheet.

b) The Income Statement.

c) The Statement of Cash Flows.

d) All of the above.