Test your learning about ‘accounting equation’ chapter by answering 10 short questions given below. We suggest you try to answer each question yourself before clicking on the ‘see answer’ button.
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1. What is accounting equation?.
2. What is owner's equity?
3. If total assets are $50,000 and total liabilities are $20,000, what is the amount of owner's equity?
4. If total liabilities are $40,000 and owner's equity is $60,000, what is the amount of total assets?
5. If total assets are $20,000 and owner's equity is $15,000, what is the amount of total liabilities?
6. Merchandise costing $12,000 are sold for $15,000. How does this transaction impact accounting equation?
7. Merchandise costing $15,000 are sold for $12,000. How does this transaction impact accounting equation?
8. Which financial statement is closely related to the accounting equation and why?
9. What is difference between liabilities and owner's equity?
10. How does depreciation on a fixed asset affects accounting equation?