1.

The payment of liability will

a. Decrease total liabilities and decrease total owner’s equity

b. Decrease total assets and increase total owner’s equity
c. Decrease total assets and decrease total liabilities
d. Have no effect on total assets, liabilities or owner’s equity

2. The purchase of an assets for cash will

a. Increase total assets and increase total owner’s equity

b. Increase total assets and increase total liabilities
c. Increase total assets and decrease total liabilities
d. Have no effect in total assets, liabilities or owner’s equity

3. Which of the following is not considered in initially recording a business transaction?

a. Classification
b. Recognition
c. Summarization
d. Valuation

4. When liability is paid, which of the following statements is true?

a. Total assets and liabilities remain the same

b. Total assets and total owner’s equity decrease
c. Total assets decrease by the same amount that total liabilities increase
d. Total assets and total liabilities decrease