ACCOUNTING ENTRANCE EXAMINATION PRACTICE QUESTION SET
J.M. TULL SCHOOL OF ACCOUNTING ENTRANCE EXAMINATION
PRACTICE QUESTION SET
Important: PRINT your response (A,B,C,D or E) that best completes the statement or answers the question
next to the following Multiple Choice Questions.
TOPIC: Introducing Accounting in Business
If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased
$30,000 during the same period, the assets of the business must have:
A) Decreased $105,000.
B) Decreased $45,000.
C) Increased $30,000.
D) Increased $45,000.
E) Increased $105,000.
A company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the
A) Assets, $30,000 increase; liabilities, no effect; equity, $30,000 increase.
B) Assets, $30,000 decrease; liabilities, $30,000 decrease; equity, no effect.
C) Assets, $30,000 decrease; liabilities, $30,000 increase; equity, no effect.
D) Assets, no effect; liabilities, $30,000 decrease; equity, $30,000 increase.
E) Assets, $30,000 decrease; liabilities, no effect; equity $30,000 decrease.
Determine the net income of a company for which the following information is available.
Employee salaries expense.
Rent expense .
According to generally accepted accounting principles, a company's balance sheet should show the company's assets
at the cash equivalent value of what was given up. This is known as the:
A) Objectivity Principle
B) Monetary Unit Principle
C) Business Entity Principle
D) Revenue Recognition Principle
E) Cost Principle
A company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the
accounting equation are:
A) Total assets decrease and equity increases.
B) Both total assets and total liabilities decrease.
C) Total assets, total liabilities, and equity are unchanged.
D) Both total assets and equity are unchanged and liabilities increase.
E) Total assets increase and equity decreases.