Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January:

Issued 10,000 shares of common stock for $15,000 cash.

Purchased land for $12,000, signing a note payable for the full amount.

Purchased office equipment for $1,200 cash.

Received cash of $14,000 for services provided to customers during the month.

Purchased $300 of office supplies on account.

Paid employees $10,000 for their first month's salaries.

What was the total amount of Gotebo's liabilities following these six transactions?

A) $12,300.

B) $27,300.

C) $22,600.

D) $15,500.

Answer: A

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January:

Issued 10,000 shares of common stock for $15,000 cash.

Purchased land for $12,000, signing a note payable for the full amount.

Purchased office equipment for $1,200 cash.

Received cash of $14,000 for services provided to customers during the month.

Purchased $300 of office supplies on account.

Paid employees $10,000 for their first month's salaries.

How many of these transactions decreased Gotebo's total assets?

A) One.

B) Two.

C) Three.

D) Four.

Answer: A

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January:

Issued 10,000 shares of common stock for $15,000 cash.

Purchased land for $12,000, signing a note payable for the full amount.

Purchased office equipment for $1,200 cash.

Received cash of $14,000 for services provided to customers during the month.

Purchased $300 of office supplies on account.

Paid employees $10,000 for their first month's salaries.

How many of these transactions increased Gotebo's liabilities?

A) Four.

B) Three.

C) Two.

D) One.

Answer: C

Consider the following transactions:

Issued common stock for cash.

Purchased equipment by signing a note payable.

Paid rent for the current month.

Collected cash from customers on account.

How many of these transactions increased the company's total assets?

A) One.

B) Two.

C) Three.

D) Four.

Answer: B

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