QUIZ ON CHAPTER 1
Important: PRINT your responses in the space provided next to each question.
For the following Multiple Choice Questions, identify the letter of the choice (A,B,C,D or E) that best completes
statement or answers the question.
1. A company incurred $52,000 (to be paid next year) for the current year's advertising activities. What
effect be on the accounting equation?
Assets, no effect; Liabilities, $52,000 decrease; Equity, $52,000 increase.
Assets, $52,000 increase; Liabilities, $52,000 increase ; Equity, no effect.
Assets, $52,000 increase ; Liabilities, no effect; Equity, $52,000 increase.
Assets, no effect; Liabilities, $52,000 increase; Equity, $52,000 decrease.
Assets, $52,000 decrease; Liabilities, no effect; Equity, $52,000 decrease.
2. The accounting guideline that requires financial statement information to be supported by independent,
evidence other than someone's belief or opinion is the:
Business entity principle
Monetary unit principle