1. Which one of the following represents the expanded basic accounting equation?

A) Assets = Liabilities + Common Shares + Dividends â?? Revenue â?? Expenses
B) Assets + Dividends - Expenses = Liabilities + Common Shares + Revenues
C) Assets â?? Liabilities â?? Dividends = Common Shares + Revenues â?? Expenses
D) Assets = Revenues + Expenses â?? Liabilities



2. Which of the following statements is incorrect?

A) Liabilities + Assets = Capital
B) Assets â?? Liabilities = Capital
C) Liabilities + Capital = Assets
D) Assets - Capital = Liabilities



3. If the assets of a business are Rs. 100,000 and equity is Rs. 20,000, the value of liability will be?

A) Rs. 100,000
B) Rs. 80,000
C) Rs. 120,000
D) Rs. 20,000



4. Which of the following is not a satisfactory statement of the balance sheet equation?

A) Assets = liabilities + ownerâ??s equity
B) Assets - liabilities = ownerâ??s equity
C) Assets = liabilities - ownerâ??s equity
D) Assets - ownerâ??s equity = liabilities



5. During a reporting period, a companyâ??s assets increase by Rs. 80,000,000. Liabilities decrease by Rs. 20,000,000. Equity must therefore?

A) Decrease by Rs. 100,000,000
B) Increase by Rs. 100,000,000
C) Decrease by Rs. 60,00,000
D) Increase by Rs. 60,000,000