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FAR Chapter 3 Problem 4

This document contains 10 multiple choice questions testing understanding of accounting concepts like the basic accounting equation, assets, liabilities, equity, income, and expenses. It asks the test taker to identify incorrect statements about these concepts, calculate missing values given information about other accounts, and determine ending balances.

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jelou ubag
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47 views1 page

FAR Chapter 3 Problem 4

This document contains 10 multiple choice questions testing understanding of accounting concepts like the basic accounting equation, assets, liabilities, equity, income, and expenses. It asks the test taker to identify incorrect statements about these concepts, calculate missing values given information about other accounts, and determine ending balances.

Uploaded by

jelou ubag
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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FAR Chapter 3 Problem 4

1. Which of the following is incorrect regarding the basic equation? The basic accounting
equation is applicable only in basic accounting but not in higher accounting.
2. Which of the following is not an essential factor in determining the existence of an asset?
Present obligation
3. For liability to exist, there must be a present obligation along with other aspects of liability. a
present obligation exists if the entity has already obtained economic benefits or taken an
action, and as a consequence, the entity will or may have to transfer an economic resource
that it would not otherwise have had to transfer.
4. Which of the following is incorrect concerning equity? It is different from capital, net assets,
or net worth.
5. Which of the following is not a correct variation of the expanded accounting equation?
Assets=liabilities+equity-income+expenses
6. Which of the following income statements is incorrect? it results in decreases in equity.
7. An entity has a total liabilities of 360,000 and total equity of 90,000. How much are the total
assets? 450,000
8. An entity has total assets of 360,000 and total equity of 90,000. How much are the total
liabilities? 270,000
9. An entity had beginning equity of 123,000. If the total income for the period is 59,000, while
the total expenses are 81,000, how much is the ending balance of equity? 101,000
10. An entity had total liabilities of 340,000 at the end of the year. The beginning equity is
280,000. If during the year, the entity earned an income of 420,000 and incurred expenses
of 390,000, how much is the ending balance of total assets? 650,000

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