Liabilities and Equity in Accounting Coursera Quiz Answers

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In this third course, you will learn about liability and equity accounts and its effect on the balance sheet. If you have mastered bookkeeping basics and understand accounting assets, you are ready to jump into Liabilities and Equity in Accounting. You will explore the various types of liability, including: current and long term, payroll, and sales tax. Additionally, you will learn about the equity portion of the accounting equation and how to account for changes in owner’s equity.

By the end of this course, you will be able to: -Describe the three main characteristics of liabilities. -Demonstrate an understanding of the basic payroll accounting functions and tasks. -Compare and contrast the different types of equity -Use the accounting equation to describe the financial position of an organization. Courses 1 and 2 in the Intuit Bookkeeping Professional Certificate, or the equivalent, are recommended prerequisites for this course.

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Liabilities and Equity in Accounting Week 01 Quiz Answers

Liabilities Overview Practice Quiz

Q1. The claims against a company’s assets are known as what?

  • Equity
  • Liabilities
  • Notes Payable
  • Accounts Payable

Q2. A company’s obligations that will come due within one year are known as what?

  • Liabilities
  • Current Liabilities
  • Non-current Liabilities
  • Notes Payable

Q3. A company’s obligations that won’t come due within one year are known as ________.

  • Liabilities
  • Current Liabilities
  • Non-current Liabilities
  • Notes Payable

Q4. The expected balance of a particular account type is known as ___________.

  • The expected balance
  • The debit balance
  • The credit balance
  • The normal balance

Q5. True or False: Liabilities have a normal credit balance.

  • True
  • False

Additional Current Liabilities Practice Quiz

Q1. T​rue or False: A $25,000, five-year note for a trailer that requires a monthly payment of $1,000 should go under the asset section of the balance sheet.

  • F​alse
  • T​rue

Q2. Why is deferred revenue considered a liability?  

  • Because the price of the good or service may fluctuate.
  • Because it is considered an expense until the payment is collected.
  • Because it is technically for goods or services still owed to customers.

Q3. In the case of a company’s deferred revenues, which occurs first? 

  • Earning the revenues
  • Receiving The Money From The Customer

Q4. When a customer gives you an advance payment: 

  • You decrease your deferred revenue account. As you deliver goods or services, your deferred revenue account will increase.
  • You increase your deferred revenue account. As you deliver goods or services, your deferred revenue account will increase too.
  • You increase your deferred revenue account. As you deliver goods or services, your deferred revenue account will decrease.

Q5. Sal takes out a vendor line of credit of $3,000 for some upgrades to his store. He will then debit his line of credit under ______   for $3,000 and credit his ______ for the same amount.

  • Accounts Receivable; Equity 
  • Cash Account; Accounts Payable 
  • Cash Account; Accounts Receivable 
  • Accounts Payable; Cash Account

Q6. True or False: Current Liabilities are only amounts we owe to suppliers (of merchandise or services) bought on credit. 

  • F​alse
  • T​rue

Quiz : Liabilities and Equity in Accounting Assessment

Q1. Liabilities have a normal ________________ balance.

  • Debit
  • Credit

Q2. An account with a balance other than what is expected or normal may indicate a(n) __________.

  • Embezzlement
  • Error
  • Deferred Tax
  • Deferred Revenue

Q3. Dale wants to take out a mortgage to purchase a commercial space to expand his business: “Tailor Swift – Quick Alterations and Embroidery Services”. He has found a property, prepared his business proposal, and is going to meet with the bank. He has been working out of his home for years and already has a good client base, lots of equipment, and inventory valued at $50,000 to get his business off the ground in a formal space.

If granted a $100,000 mortgage, how would the accounting equation look to keep his books balanced?

  • $100k increase in liabilities + $0 no change in equity = $100k increase in assets
  • $100k decrease in liabilities + $50k increase in equity = $50K in assets
  • $100k no change in assets + $50k in equity = $150k increase in liabilities
  • $100k decrease in liabilities – $0 no change in equity = $100k increase in assets

Q4. True or False: Bonds Payable are long-term debt securities issued by a company that promises to pay back the principal at some specified point in the future.

  • False
  • True

Q5. Assets have a normal _________ balance.

  • Debit
  • Credit

Q6. Suzanne owns a clothing store in a small beach town called ‘Sunny Side Threads’. She wants to expand her brand’s influence by using a van she can hang clothes and accessories in for traveling to events along the coast during summer.

If Suzanne were to purchase a $45,000 van with a bank loan, paying $12,000 down, at 6.99% over 72 months, where would the loan itself go on the balance sheet?

  • Assets, under PP&E
  • Liabilities, under long-term
  • Liabilities, under short-term
  • Equity, under investments

Q7. Suzanne owns a clothing store in a small beach town right along the boardwalk called ‘Sunny Side Threads’. She wants to expand her brand’s influence by using a van she can hang clothes and accessories in for traveling to events along the coast during summer. If Suzanne were to purchase a $45,000 van with a bank loan, paying $12,000 down, at 6.99% over 72 months, where would Suzanne’s payments due in the current year (or the next 12 months) be recorded on the balance sheet?

  • Current Assets
  • Current Liabilities
  • Long-term Assets
  • Long-term Liabilities

Q8. The following are non-current liabilities except

  • Deferred Revenue
  • Bonds Payable
  • Deferred Income taxes
  • Notes Payable

Q9. Tosin has a customer who has already paid him to come pressure wash their house next month. Tosin would record this payment as a _______?

  • Current Liability
  • Non-Current Liability

Q10. The following are current liabilities except:

  • Notes Payable
  • Short-term Loans Payable
  • Compensation and Benefits
  • Deferred Revenue

Q11. True or False: When a business opens a line of credit with a vendor they are able to use that credit anywhere as long as it’s in the United States.

  • False
  • True

Q12. When setting up an account to document a line of credit in QuickBooks, you need to:

  • Set up an S-Corp to ensure you can accurately enter data in QuickBooks
  • Set up two separate accounts, one for the principal and an expense account for interest
  • Set up an account for the person responsible for paying the line of credit down

Q13. Seymore Fish takes out vendor credit of $5500 with “Akon Aquatics Custom Tank Supplies” to replace his custom-made fish tanks for “Seymore’s Sea Store” where he sells pet fish and small sea creatures.

Seymore would debit his line of credit under _______ for $5,500 and credit his _____ for $_______?

  • Long-term debt – Liabilities; $5,500
  • Current assets – Cash and cash equivalents; $4,000
  • Accounts payable – Cash; $5,500

Q14. Seymore Fish of “Seymore’s Sea Store” purchased the glass and special paneling needed to rebuild his fish tanks for $2,000 from “Akon Aquatics Custom Tank Supplies”.

Should he:

  • Record the purchases as soon as the bill arrives, even though the payments have not yet been made to Akon Aquatics Custom Tank Supplies.
  • Record the purchases after the bill arrives and payment to Akon Aquatics
  • Record the purchase after the full amount of the line of credit from Akon

Q15. When Seymore makes purchases from, but still owes money to “Akon Aquatics Custom Tank Supplies” for the line of credit, he records the $2.000 of purchases in the journal entry by:

  • Debiting the supplies purchased under the expense named New Tank Supplies for $2.000 and crediting Accounts payable for $2.000
  • Debiting the supplies purchased under the liability named Debt and crediting PP&E under concurrent assets for equipment for $2,000
  • Debiting the supplies purchased under the equity named Seymore’s Stash and crediting the investment under store revenue or $2,000

Q16. Now, Seymore has used and paid off the $2,000 line of credit he owed to “Akon Aquatics Custom Tank Supplies”. This journal entry should:

  • Debit notes and loans payable for $2,000 and credit investments for $2,000.
  • Debit accounts payable for $2,000 and credit cash for $2,000.
  • Debit financial inputs for $1,500 and credit share equity for $2,000.

Q17. Gift card purchases from “Penelope’s Punky Pins” would be considered deferred revenue.

  • False
  • True

Q18. Why is deferred revenue considered a liability?

  • Because it is considered an expense until the payment is collected
  • Because it is technically for goods or services still owed to customers
  • Because the price of the good or service may fluctuate

Q19. Deferred Revenues are not considered revenue until the product or service has been provided, thus they are not reported on the income statement.

  • True
  • False

Q20. When a customer gives you an advance payment, you will decrease the deferred revenue account. As you deliver goods or services, your deferred revenue account will increase.

  • True
  • False

Liabilities and Equity in Accounting Week 02 Quiz Answers

Sales Tax Liability Practice Quiz

Q1. In the same state, shoes, bananas, and a haircut would all be subject to the same sales tax rate. 

  • T​rue
  • I​t depends
  • F​alse

Q2. Funds in the Sales Tax Payable account can be treated as if they were Sales Revenue. 

  • F​alse
  • T​rue

Q3. A customer purchases a pair of leopard spot fuzzy dice for $30 and the purchase is subject to 8% tax.

What’s the total amount Crankshaft Customs should collect from the customer?

  • $30.80
  • $​38.00
  • $32.40
  • $32.08

Q4. Which account is missing in this journal entry for the $32.40 sale that includes $2.40 in tax? 

AccountDebitCredit
C​ash$3​2.40
?​$2​.40
S​ales Revenue$30.00
  • Accounts Receivable
  • Sales Tax Payable
  • Sales Tax Receivable
  • Inventory

Q5. Which feature of accounting software can provide information about how much sales tax is owed to each tax agency? 

  • Customer Summary Report
  • Bill Payments List
  • Sales Tax Liability Report
  • Profit and Loss by Month

Matching Principle and Payroll Practice Quiz

Q1. A salesperson makes a 5% commission on every sale they make in the month of January, but their commission isn’t paid until February. This means that if they sell $100 worth of products in January, the company will pay them $5 in February.  

When will the commission be recorded on the books?

  • J​anuary
  • F​ebruary

Q2. An employee earns a bonus of $10,000 in 2019 based on their performance in the workplace. The bonus isn’t paid out to them until 2020. 

When will the bonus be recorded on the income statement? 

  • 2​019
  • 2​020

Q3. Let’s say  a full time hourly employee’s pay period ends on April 20th, but they didn’t get paid until May 3rd. This expense needs to be recorded in which month?

  • A​pril
  • M​ay

Payroll Practice Quiz

Q1. The following could be payroll deductions on an employee’s paystub, except:

  • Garnishment
  • SUTA
  • Health insurance
  • FICA

Q2. The following are reasons for running payroll reports, except:

  • They produce financial statements that are helpful
  • They help inform decision making and tracking
  • You might need to issue a report on a specific employee if there is a dispute on hours paid
  • You might be asked to update the business owner on the cost of payroll

Q3. The following are examples of employee-related items on a paystub, except:

  • Deductions
  • Gross Pay
  • FUTA
  • Pay Period

Q4. The following are items that should be included in a payroll policy, except:

  • When employees will be paid
  • How employees will be paid
  • What deductions and benefits will impact pay.
  • Where payroll will be submitted

Bookkeeping for Payroll Practice Quiz

Q1. An employee’s paycheck will be: Gross Wages Earned – Deductions = Net pay. This will be the amount recorded for wages payable. 

  • T​rue
  • F​alse

Q2. Which of the following is not true of a guaranteed payment to a partner in a partnership business? 

  • There are no withholdings from the payment.​
  • They are made regardless of how the business is doing.​
  • They are considered employee wages.​
  • They must be reasonably compensated.​

Q3. Payroll reports are for internal use only. 

  • T​rue
  • F​alse

Quiz : Payroll, Obligations, and Loans Assessment

Q1. True or False: Net pay is the result of total wages earned minus SUTA (state unemployment tax).

  • False
  • True

Q2. All of the following are examples of employee deductions when calculating net pay except:

  • FICA
  • Health Insurance
  • FUTA
  • Garnishments

Q3. Jose is expanding his painting business and wants to hire additional contractors to help out. He knows these employees are not actually considered employees but are non-employees. As non-employees, Jose knows the following are true except:

  • He will have to withhold FICA taxes and submit those with regular employee withholdings
  • He will use a form W-9 for hiring instead of a W4.
  • He will expect an invoice from his contractors for hours worked and pay owed
  • He will not have to pay overtime as time and a half, but will pay the regular rate regardless of hours

Q4. Aruna is a partner in her sister Yasmine’s company, ‘Simply Saffron,’ a traditional Indian cuisine restaurant known for its open tandoor kitchen and Vindaloo. Aruna and Yasmine have decided to make sure they are equally invested and share the day-to-day running of the restaurant. They have also decided not to pay themselves by guaranteed payments, but will instead use a different option. Which of the following is the other option available to them as ownership partners?

  • Pay themselves hourly wages instead, making sure they don’t have any overtime.
  • They can use an owner’s draw as needed, but cannot draw more than their initial investment until the end of the year profits are known.
  • Pay themselves a salary, that way it’s a predictable amount and can be accounted for under employee wages.
  • They can’t pay themselves as business owners unless the business makes profits.

Q5. For Simply Saffron, food sales are subject to one sales tax rate, alcohol a different sales tax rate, and their branded merchandise a third sales tax rate. In addition to confirming rates and categories with their accountant, which QuickBooks Online tool can they use to accurately track their sales tax liability?

  • Payroll Tax Center
  • Sales Tax Invoice
  • Sales Tax Center
  • Chart of Accounts

Q6. The computer system stopped working, and Aruna has to calculate sales tax manually. The food bill is $150, and it’s subject to a 10% tax. What’s the total amount she should charge the customer? (Use whole numbers and don’t use a $ sign)

Q7. Which account should be credited $150 to complete this journal entry when recording a $165 sale that includes $15 sales tax?

Cash$165
???$150
Sales tax payable$15
  • Accounts payable
  • Expense
  • Revenue
  • Sales tax receivable

Q8. Money collected from a customer as sales tax should be booked as revenue.

  • True
  • False

Q9. All of the following factors can impact sales tax liability except:

  • If you have e-commerce sales
  • Where your business is located
  • The type of software you use to track your tax
  • The type of product or service you are selling

Q10. What is Sunil Akswali’s net pay? (format your answer as xxxx.xx and use no $ sign)

Q11. What are Sara Tedeski’s total current deductions? (format your answer as xxx.xx and don’t use a $ sign)

Q12. What is Odesa Smerako’s gross pay? (format your answer as xxxx.xx and don’t use a $ sign)

Q13. What would be the total wages debited on the journal for the wages and salaries expense account? (format your answer as xxxx.xx and don’t use a $ sign)

Q14. What would be the total amount credited under FICA Social Security Payable on the journal? (format your answer as xx.xx and don’t use a $ sign)

Q15. The end of the year holiday season is upon us and Carter is so excited about the anticipated boom of his business, “Candy Cane Lanes”, a holiday-themed pop-up bowling alley. Carter has already hired seasonal help. He has several events already lined up at the end of November leading into their busiest month. He’s set up his first pay period to run from Monday, November 23rd – Sunday, Dec. 6th with hourly employees paid bi-weekly by direct deposit. This means, their first paycheck won’t be deposited until Wednesday, December 9th. When would Carter record the wage expense for this pay period in his books?

  • On December 6th, when the pay period ends.
  • He would have to calculate how much of the wages were earned in November to record at the end of the month and do a similar calculation for December’s wages.
  • On December 7th, the day after the pay period ends.
  • He would wait until December 9th to record the wages earned.

Q16. Only a tax accountant can provide tax advice, but as a bookkeeper, you can guide employees when filling out their tax withholding forms.

  • True
  • False

Q17. Your business address and services will factor into your tax frequency, tax agency, and tax rate.

  • True
  • False

Q18. What would be reported as total hours for overtime? (format your answer as x:xx)

Q19. If this employee had deductions totaling $112.46 for this weekly period, what would be their net pay? (format your answer as xxx.xx and don’t use a $ sign)

Q20. If this employee was classified as exempt under FLSA (Fair Labor Standards Act), what would be different about this time card? Select all that apply.

  • They would not have any overtime pay.
  • They would have been paid overtime on Sunday, because they worked the weekend.
  • They would be paid a flat weekly rate.

Liabilities and Equity in Accounting Week 03 Quiz Answers

Long-term Obligations and Notes Payable Practice Quiz

Q1. True or False: Any money borrowed or owed by a business, regardless of the payback time frame is considered a long-term obligation.

  • True
  • False

Q2. Which of the following is not an example of a long-term liability?

  • Mortgage Loan
  • Vehicle Loan
  • Accounts Payable
  • Notes Payable

Q3. If a company decides to split a loan or note payable on their balance sheet, which of the following would go as a line item in current liabilities?

  • The total amount due on the long-term obligation in the next month.
  • The total amount due on the long-term obligation in the next 6 months.
  • The total amount due on the long term obligation in the next 8 months.
  • The total amount due on the long term obligation in the next 12 months.

Bank Loans Practice Quiz

Q1. A legal claim on an asset used as collateral in satisfying a debt is called a:

  • Collateral Asset
  • Held Asset
  • Lien
  • Secured Asset

Q2. The process of systematically repaying a loan over time is referred to as:

  • Capitalization
  • Amortization
  • Depreciation
  • Indemnification

Q3. A loan used to finance a company’s daily operations is called a(n):

  • Working Capital Loan
  • Unsecured Loan
  • Secured Loan
  • Commercial Line of Credit

Stockholder Equity Practice Quiz

Q1. Owner’s equity is calculated by:

  • Adding up all of the business assets and deducting all of its liabilities.
  • Subtracting all of the business assets from its liabilities.
  • Adding up all of the business liabilities and deducting all of its assets.

Q2. If a company has $80,000 in total assets and $40,000 in liabilities, the owner’s equity is ______.

  • $60,000
  • $20,000
  • $40,000
  • $80,000

Q33. You record an owner’s draw by _____ the Owner’s Draw Account and _____ the Cash Account.

  • crediting; crediting
  • debiting; debiting
  • crediting; debiting
  • debiting; crediting

Q4. At the end of a fiscal year, Winston’s Seafood had draws totaling $8,000. What is the first step in closing the draw account for this fiscal period?

  • Crediting $8,000 the Owner Capital account.
  • Deducting $8000 from the Owner Equity account.
  • Crediting $8,000 to the Owner Withdrawals account.

Quiz : Equity and Liabilities Assessment

Q1. Which of the following best defines a Lien?

  • A legal claim on an asset used as collateral in satisfying a debt
  • The structured process of paying both the principal and interest over a period of time
  • The amount of interest that is applied to a loan, annually
  • The number of years that it will take to pay back the loan

Q2. True or False: An Unsecured Loan is a loan in which the borrower has pledged collateral as part of the loan agreement.

  • False
  • True

Q3. Your client has taken out a 15-year loan of $200,000 at 6% annual interest. Their annual installments are $20,252.52. Using the amortization formula, calculate how much of the annual installment payment is going towards the principal for year 1. (your answer should be in the following format and not include a $ sign: xxxx.xx)

YearLoan OutstandingTotal PaymentInterest PaymentPrincipal Payment
0$200,000
1$20,252.52

Q4. On the balance sheet, a note payable will appear as a(n):

  • Equity
  • Current Liability
  • Long-term Liability
  • Asset

Q5. Which of the following best describes the term Owner’s Draw?

  • Increases in equity from profits or additional capital contributions
  • Decreases in equity from either losses or capital distributions
  • The closing balance of the owner’s capital account
  • The opening balance of an owner’s capital account

Q6. Your client has taken out a 15-year loan for $250,000 with a 5% annual interest. Their annual installments are $23,723.76. Using the amortization formula, calculate how much of the annual installment payment is going towards the principal for year 1. (your answer should be in the following format and not include a $ sign: xxxx.xx)

YearLoan OutstandingTotal PaymentInterest PaymentPrincipal Payment
0$250,000
1$23,723.76

Q7. Your client has just withdrawn $2,000 from their equity in the company. The accounts affected are the cash account and the Owner’s Draw account. Which of the following is the correct steps to set up the journal entry for this transaction?

  1. Debit Owner’s Draw $2,000
  2. Debit Cash Account $2,000
  1. Debit Owner’s Draw $2,000
  2. Credit Cash Account $2,000
  1. Credit Cash Account $2,000
  2. Credit Owner’s Draw $2,000
  1. Debit Cash Account $2,000
  2. Credit Owner’s Draw $2,000

Q8. Your client has taken out a 15-year loan for $300,000 with a 5% annual interest. Their annual installments are $23,723.76. Using the amortization formula, calculate how much of the annual installment payment is going towards the principal for year 2. (your answer should be in the following format and not include a $ sign: xxxx.xx)

YearLoan OutstandingTotal PaymentInterest PaymentPrincipal Payment
0$300,000
1$23,723.76
2$23,723.76

Q9. Which of the following best describes a company with the following attributes?

  • Ownership: Two or more partners
  • Capital Contributions: Partner Equity
  • Taxes: Self-employed taxes; Personal taxes
  • Partnership
  • Limited Liability Company (LLC)
  • S Corp
  • Sole Proprietorship

Q10. Your client secured a short-term loan of $5,000. What would be the correct way to record the initial transaction in the general journal?

  • Credit cash $5,000 and debit loans payable $5,000
  • Debit Cash $5,000 and credit Loans Payable $5,000
  • Debit cash $5,000 and debit loans payable $5,000
  • Credit cash $5,000 and credit loans payable $5,000

Q11. Which of the following best describes a company with the following attributes?

  • Ownership: One person
  • Capital Contributions: Owner’s Equity
  • Taxes: Personal taxes
  • Partnership
  • Sole Proprietorship
  • S Corp
  • Limited Liability Company (LLC)

Q12. A loan in which the borrower has pledged some asset as collateral is known as a(n):

  • Secured Loan
  • Unsecured Loan
  • Mortgage Loan
  • Working Capital Loan

Q13. True or False.: When a company takes out a loan to purchase a vehicle or equipment, the value of the vehicle or equipment should be listed on the balance sheet as an asset.

  • True
  • False.

Q14. Which of the following is the correct accounting equation to use when determining equity?

  • Assets – Liabilities = Equity
  • Asset * Liabilities = Equity
  • Assets + Liabilities = Equity
  • Assets = Liabilities + Equity

Q15. The percentage of the existing principal loan balance that the borrower must pay the lender for borrowing the money is referred to as the:

  • Interest rate
  • Mortgage Loan Rate
  • Refinance Rate
  • Prime Rate

Q16. You are working on a balance sheet for your client. Currently, you have a total asset value of $51,500 and a total liability value of $7,500. Using the accounting equation, what would your total equity value be? (type your answer as a whole number without punctuation)

Q17. The multi-column chart listing each payment required during the loan period is called a:

  • Loan Amortization Schedule
  • Depreciation Schedule
  • Loan Defrayment Schedule
  • Mortgage Repayment Schedule

Q18. On the balance sheet, if your client splits their loan into long-term liabilities and current liabilities, which of the following would be the value that would be placed in the current liability section?

  • The total amount due on the loan over the next twelve months
  • The total amount due on the loan over the next month
  • The total amount due to interest over the next twelve months
  • The total amount due on the loan over the next six months

Q19. True or False: A mortgage loan generally requires the real estate to serve as collateral, but commercial loans generally may or may not have an asset associated with the loan to put on the books.

  • True
  • False

Q20. Which best defines amortization?

  • The systematic process of financing the company’s daily operations
  • The systematic process of depreciating assets over time
  • The systematic process of repaying a loan over time
  • The systematic process of calculating the interest payments

Liabilities and Equity in Accounting Week 04 Quiz Answers

Accounts Payable, Cash Payments, Sales Tax Payable Practice Quiz

Q1. Moe’s Fro Yo makes a payment on a long-term note. What is the effect on the accounting equation?

  • No effect on Assets. Liabilities would increase. The Equity would decrease.
  • Assets would decrease. Liabilities would decrease. There would be no effect on Equity.
  • There would be no effect on Assets. Liabilities would increase, and equity would increase.
  • Assets would increase. Liabilities would decrease. There would be no effect on Equity.

Q2. Gene’s Gummy Shoppe purchased supplies from a vendor on credit and will pay the invoice at a later date when it is due. What is the effect on the accounting equation?

  • Assets would increase. Liabilities would increase. There is no effect on Equity.
  • Assets would increase. Liabilities would decrease. There would be no effect on Equity.
  • Assets would decrease. Liabilities would increase. Equity would increase.
  • Assets would increase. Liabilities would decrease. Equity would decrease.

Q3. Harry’s Handsome Cuts, a barber, hired Candy’s Consultants, a consulting firm, to do consulting work. Candy’s Consultants has billed Harry’s Handsome Cuts $5,000, which will be due in August. What is the effect on the accounting equation?

  • Assets would decrease. Liabilities would increase. Equity will increase.
  • No change to Assets, Liabilities would increase, Equity would decrease.
  • No change to Assets, Liabilities would decrease, Equity would increase.
  • Assets would increase, no change to Liabilities, Equity would decrease.

Practice with Payroll Practice Quiz

Q. True or False: The more you pay out to employees in wages and salaries the less cash you’ll have on hand in your assets to pay off liabilities.

  • True
  • False

Q2. Which of the following best describes the journal entry for recording employee wages?

  • A debit to wage expense and a credit to all employee deductions and cash
  • A debit to all employee deductions and a credit to wage expense and cash
  • A debit to cash and a credit to all employee deductions and wage expense
  • Debit both wage expense and cash and credit all employee deductions

Q3. Which of the following best describes the journal entry for recording the employer’s expense?

  • A debit to both payroll tax and to all taxes payable
  • A debit to payroll tax and a credit to all taxes payable
  • A credit to both payroll tax and to all taxes payable
  • A debit to all taxes payable and a credit to payroll tax

Practice with Bank Loans and Equity Practice Quiz

Q1. Greenwald’s Groceries took a loan for $20,000 to cover a new deli slicer. The effect of this transaction on the accounting equation will be:

  • Assets and liabilities decrease by $20,000
  • Assets and Liabilities increase by $20,000
  • Assets and Equity increase
  • Assets and liabilities decrease depending on how much the current assets are

Q2. Using the accounting equation, if assets and liabilities both decrease by $4,000, what is the effect on owner’s equity?

  • Increases by $8,000
  • No Effect
  • Decreases by $8,000

Q3. Using the accounting equation, if owner equity increases by $10,000 and liabilities decrease by $20,000, what do assets change by?

  • No change
  • Decrease by 10,000
  • Increase by $10,000

Q4. Using the accounting equation, if liabilities increase by $6,000 and equity reduces by $10,000, what is the change in assets?

  • Increase of 4,000
  • Decrease of $4,000
  • No change

Q5. If All Pumped Up Bounce House Rentals total liabilities decreased by $75,000, and the owner’s equity increased by $15,000 over a certain period of time. The total assets must change by what amount and direction during the same period?

  • $60,000 decrease
  • $60,000 increase
  • $75,000 decrease
  • $90,000 increase

Quiz : Liabilities and Equity in Accounting Case Study Assessment

Q1. Crankshaft Customs made __________ in net income from September 1 – September 30.

  • $24,900
  • $9,685
  • $11,115
  • $11,615

Q2. What was the total Revenue in September for Crankshaft Customs?

  • $8,000
  • $52,000
  • $29,800
  • $100,000

Q3. The total debits for the trial balance equal: (format your response as xxxxx)

Q4. On the Sales Tax Liability tab, the amount owed to Tucson City is ____. (format your response as xxx and don’t use any symbols)

Q5. On Sept. 25, $3,000 is ______ to the Prepaid subscriptions account to realize this prepaid revenue.

  • debited
  • credited

Q6. Crankshaft customs had $26,100 in cash on Sept. 1. What was the change in the cash balance at the end of the month?

  • +$1,235
  • -$1,235
  • -$1,625
  • +$1,625

Q7. Which of the following is not accounted for in the financial statements you prepared for Crankshaft Customs?

  • SUTA Tax Payable
  • Vehicle Loan Payable
  • FICA Tax Payable
  • Sales Tax Payable

Q8. What were Crankshaft Customs’ total liabilities on September 30?

  • $45,850
  • $55,850
  • $41,785
  • $65,785

Q9. As of Sept 30, what is the balance of the bank line of credit account?

  • $800
  • $1,600
  • $0
  • $3,200

Q10. On September 30, what was Edward Johnson’s net earnings?

  • $7,500
  • $9,000
  • $8,000
  • $8,500
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