1. A RM10,000 account payable is paid by the business.

How is the accounting equation

affected?

Answer : B. Assets decrease RM10,000; liabilities decrease RM10,000

2. A business receives a utility bill and intends to pay the bill next month. When the
business receives the bill, how does this event affect the accounting equation?

Answer : B. Liabilities increase; owner's equity decreases

3. A shop-house is purchased by a business for RM300,000. The company pays for the
shop-house with a RM60,000 cash payment and the execution of an RM240,000
promissory note payable to the seller. How does this purchase affect the business's
accounting equation?

D. Assets increase RM240,000; liabilities increase RM240,000

4. Jasmine Bakery started the year with total assets of RM120,000 and total liabilities of
RM60,000. During the year, the business earned revenues of RM180,000 and incurred
expenses of RM105,000. There is no capital contributions during the year, but the owner
make withdrawals of RM90,000. What is the amount of owner's equity at the end of
the year?

C. RM45,000

(RM 120000+ RM 180000) = RM 60000+ [X + ( RM 105000 + RM 90000 ) ]

RM 300000 = RM 60000 + [ x + RM 195000 ]
RM300000-RM60000-RM195000 = X
X = RM 45000

5. Equipment is purchased for cash. Which of the following is TRUE?

D. There is no effect on total assets