# Accounting Equations MCQs

### Reviewed by Subject Matter Experts

Updated on March 26, 2023

Take this quick test on accounting equations to help you prepare for your exams, interviews, or different tests.

If you find it difficult to answer any of these questions, you can read about accounting ratios on this website.

This multiple choice question (MCQ) test contains 23 questions. Each question has 4 options and you'll need to choose the 1 correct option.

The results will be shown after you answer the questions and submit the quiz.

1. Resources minus capital equals:
2. Assets are always equal to:
3. Purchase of machinery for cash:
4. The excess of assets over liabilities is:
5. Expenses paid by a business decrease:
6. A person who owes money to a business is known as a:
7. Merchandise costing \$1,000 are sold for \$1,250. This will increase owner's equity by:
8. Cash is received from Mr. Jones, a debtor of the business. It will affect:
9. Capital + Liabilities - Assets = ?
10. A cash discount is provided on:
11. Cash used by an owner to start a business is called:
12. Closing stock and sundry debtors are examples of:
13. If total assets increase by \$20,000 and total liabilities increase by \$12,000, the capital will:
14. The accounting equation can be written as:
15. The capital of a sole trader will change as a result of:
16. A business can make a profit and yet have a lower bank balance. Which of the following might cause this to happen?
17. The purpose of a financial statement that lists an entity's total capital/liabilities is to show:
18. A sole trader is \$5,000 overdrawn at the bank and receives \$1,000 from a credit customer in respect of its account. Which elements of the accounting equation will change due to this transaction?
19. A sole trader purchases goods on credit. Which elements of the accounting equation will change due to the transaction?
20. A sole trader borrows \$10,000 from the bank. Which elements of the accounting equation will change due to this transaction?
21. A sole trader sells goods for cash for \$500 which had cost of \$300. Which elements of the accounting equation will change due to this transaction?
22. A sole trader increases the business's number of motor vehicles by adding his own car to its fleet. Which elements of the accounting equation will change due to this transaction?
23. Which three of the following are elements of the financial statements as identified by the conceptual framework for financial reporting?

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