Part A: Multiple Choice / True or False (30 Marks Total, 1 Mark each.
No Partial Credit)
Which of the following direct effects on the fundamental accounting model is not
possible as a result of transaction analysis?
Increase a liability and increase an asset.
Decrease shareholders' equity and increase an asset.
Increase an asset and decrease an asset.
Decrease shareholders' equity and decrease an asset.
All of the above are possible.
Assume a company's January 1, 20A, financial position was: Assets, $40,000 and
During January 20A, the company completed the following
transactions: (a) paid on a note payable, $4,000 (no interest); (b) collected accounts
receivable, $4,000; (c) paid accounts payable, $2,000; and (d) purchased a truck, $1,000
cash, and $8,000 notes payable. The company's January 31, 20A, financial position is
None of the Above
During 20B, Blue Corporation incurred operating expenses amounting to $100,000 of
which $75,000 were paid in cash; the balance will be paid in January 20C.
analysis of operating expenses for 20B, should reflect only the following
decrease stockholders' equity, $75,000; decrease assets, $75,000.