AE for Credit Purchase

Q.

When goods are purchased on credit, what will be the impact in accounting equation?

1. Assets - Decrease
   Liabilities - No effect
   Capital - Decrease

2. Assets - No effect
   Liabilities - Decrease
   Capital - Increase

3. Assets - Increase
   Liabilities - No effect
   Capital - Decrease

4. Assets - Increase
   Liabilities - Increase
   Capital - No effect

Q. When goods are purchased on credit, the value of capital will in the accounting equation.

1. increase
2. not change
3. decrease

Q.

Answer in One sentence only

1. What is real account?
2. State the meaning of accounting equation.
3. What is rule of debit and credit for nominal account?
4. What do you mean by debit?
5. Give two examples of personal account.
6. What is an account?
7. What is nominal account?
8. Give two examples of real account
9. State whether drawings increases or decreases owner’s equity.
10. State the rule for personal account.

Q.

'Is it possible to prepare the profit and loss account and the balance sheet from the incomplete books of accounts kept by a trader'? Do you agree? Explain.

Q. Which of the following accounting equations is not correct?

1. Assets - Liabilities = Equity
2. Assets - Equity = Liability
3. All of the above
4. Liabilities + Equity = Assets

Q. Net worth is the difference between _____________.

1. Total assets and total liabilities
2. Total assets and external liabilities
3. Total liabilities and current assets
4. Total assets and current liabilities

Q. What is the effect of accrued income in accounting equation?