Accounting - Study Mode

[#1246] Payment of expenses will ______ the assets
Correct Answer

(B) Reduce

Explanation

Solution: Payment of expenses will reduce the assets. When an expense is recorded at the same time it is paid for with cash, the cash (asset) account declines, while the amount of the expense reduces the retained earnings account.

[#1247] Which of the following accounting equation is correct?
Correct Answer

(C) Assets - Liabilities = Capital

Explanation

Solution: Assets - Liabilities = Capital is correct. The Accounting Equation states that the Assets are always equal to the sum of Capital & Liabilities.

[#1248] Fresh capital introduction will increase
Correct Answer

(B) Assets and Equity

Explanation

Solution: Fresh capital introduction will increase Assets and Equity. Capital will increase the Equity. Cash at Bank will increase the Asset.

[#1249] Current Assets - Current Liabilities = ?
Correct Answer

(D) Working capital

Explanation

Solution: Current Assets - Current Liabilities = Working capital. Working capital is calculated as current assets minus current liabilities.

[#1250] The process of recording in Journal is done
Correct Answer

(C) Frequently during the accounting period

Explanation

Solution: The process of recording in Journal is done frequently during the accounting period. An organization begins its accounting cycle with the recording of transactions using journal entries.