Question

1. All of the following increase owner’s equity except forwhich one?

a. investments by owners

b. revenues

c. gains

d. acquisitions of assets by incurring liabilities

2. Which of the following statements is true?

a. Tangible assets will be consumed in a year or less.

b. Tangible assets have physical substance.

c. Tangible assets will be consumed in over a year.

d. Tangible assets lack physical substance.

3. Owners have no personal liability under which legal business structure?

a. a corporation

b. a partnership

c. a sole proprietorship

d. There is liability in every legal business structure.

4. Which financial statement shows the financial position of the company?

a. balance sheet

b. statement of cash flows

c. income statement Solution

d. statement of owner’s equity

Answer 1

Solution 1:

All of the following increase owner’s equity except " acquisitions of assets by incurring liabilities"

Hence option d is correct.

Solution 2:

The true statement is "Tangible assets have physical substance."

Hence option b is correct.

Solution 3:

Owners have no personal liability under "a corporation". There liability is limited to their investment in the corporation. They are not personally liable for debt of a corporation.

Hence option a is correct.

Solution 4:

Balance sheet  shows the financial position of the company

Hence option a is correct.