Purchasing office equipment on account has what impact on the accounting equation?

A) Stockholders' equity decreases and assets increase.

B) Liabilities increase and assets increase.

C) Assets decrease and liabilities decrease.

D) Assets increase and stockholders' equity increases.

Answer: B

Purchasing supplies for cash has what effect on the accounting equation?

A) Increase assets.

B) Decrease stockholders' equity.

C) Decrease liabilities.

D) No net effect.

Answer: D

On January 1, Brad Inc. sold $30,000 in products to a customer on account. Then on January 10, Brad collected the cash on that account. What is the impact on Brad's accounting equation from the collection of cash on January 10?

A) No net effect on the accounting equation.

B) Assets increase and liabilities decrease.

C) Assets decrease and liabilities decrease.

D) Assets increase and stockholders' equity increases.

Answer: A

On September 10, MFP Co. paid employee salaries of $7,000 owed to its employees last month. What are the effects of this transaction on the accounting equation?

A) Expenses increase and liabilities increase.

B) Assets decrease and liabilities decrease.

C) Assets decrease and expenses decrease.

D) Expenses decrease and liabilities decrease.

Answer: B

Providing services to customers for cash would have what effect on the accounting equation?

A) Total assets increase; total stockholders' equity increases.

B) Total assets increase; total liabilities decrease.

C) Total liabilities decrease; total stockholders' equity increases.

D) Total liabilities increase; total stockholders' equity decreases.

Answer: A

Paying for supplies previously purchased would have what effect on the accounting equation?

A) Assets decrease and stockholders' equity decreases.

B) Assets increase and liabilities increase.

C) Liabilities decrease and stockholders' equity increases.

D) Assets decrease and liabilities decrease.

Answer: D

If a company provides services on account, which of the following is true?

A) Expenses increase.

B) Liabilities increase.

C) Stockholders' equity increases.

D) Assets decrease.

Answer: C