(Multiple Choice)
1. An investment of cash into the business will
a. decrease total liabilities.
b. decrease total assets.
c. have no effect on total assets.
d. increase stockholders’ equity.

2. Purchasing a laptop computer on account will
a. increase total assets.
b. have no effect on stockholders’ equity.
c. increase total liabilities.
d . all of the above.

3. Performing a service on account will
a. increase stockholders’ equity.
b. increase total assets.
c. increase total liabilities.
d. both a and b.

4. Receiving cash from a customer on account will
a. increase stockholders equity.
b. decrease liabilities.
c. increase total assets.
d. have no effect on total assets.

5. Purchasing computer equipment for cash will
a. increase both total assets and total liabilities.
b. decrease both total assets and stockholders’ equity.
c. decrease both total liabilities and stockholders’ equity.
d. have no effect on total assets, total liabilities, or stockholders’ equity.

6. Purchasing a building for $95,000 by paying cash of $25,000 and signing a note payable for $70,000 will
a. decrease total assets and increase total liabilities by $25,000.
b. decrease both total assets and total liabilities by $25,000.
c. increase both total assets and total liabilities by $70,000.
d. increase both total assets and total liabilities by $95,000.

7. What is the effect on total assets and stockholders’ equity of paying the telephone bill as soon as it is received each month?
Total assets .... Stockholders’ equity
a. Decrease .... Decrease
b. Decrease .... No effect
c. No effect .... No effect
d. No effect .... Decrease

8. Which of the following transactions will increase an asset and increase a liability?
a. Purchasing office equipment for cash
b. Issuing stock
c. Buying equipment on account
d. Payment of an account payable

9. Which of the following transactions will increase an asset and increase stockholders’ equity?
a. Collecting cash from a customer on an account receivable
b. Borrowing money from a bank
c. Performing a service on account for a customer
d. Purchasing supplies on account

10. Where do we first record a transaction?
a. Ledger
b. Journal
c. Trial balance
d. Account