5. Which of the following is correct regarding the balance sheetequation?

The balance sheet equation is: Liabilities equals assets minusowner's equity.

The balance sheet equation is: Assets equals liabilities plusowner's equity.

The balance sheet equation is: Assets equals liabilities plus[owner's capital minus owner's withdrawals plus/minus netincome/net loss].

The balance sheet equation is the most basic tool which measuresthe resources of a business and the claims to those resources.

All of the others alternatives are correct

6. Which one of these assets is not a current asset?

Merchandise inventory

Cash

Land

None of the others alternatives are correct

Accounts receivable

7. From the following list of accounts, determine the amountthat would be properly classified as Capital Assets (property,plant, and equipment).

Land Used in Business = $100,000
Machinery Leased from Others (no liability has been recorded) =60,000
Accumulated Depreciation = (80,000)
Inventories = 124,000
Land Held for Future Plant Site = 40,000
Building = 200,000
Investment in Shares of Construction Co. Inc. = 50,000

$360,000

$280,000

$220,000

None of the others alternatives are correct

$260,000

8. Which of these transactions of Fort Ltd is not a sourceof cash?

A tract of land was sold

Additional common shares were issued

A long-term note was issued

Additional equipment was acquired

None of the others alternatives are correct

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