Post Utme Joseph Ayo Babalola University 2025 Accounting Question 7

Practice objective / multiple choice question 7 from the 2025 Post Utme Joseph Ayo Babalola University Accounting examination.

Post Utme Joseph Ayo Babalola University 2025 Accounting Objective / Multiple Choice
Question 7 POST_UTME_JOSEPH_AYO_BABALOLA_UNIVERSITY • 2025 • ACCOUNTING • objective

A company prepares a trial balance at the end of the year. The trial balance shows the following balances: Accounts Receivable 15,000, Accounts Payable 10,000, and Common Stock 30,000. If the company's net income for the year is 20,000, what is the effect on the accounting equation?

Answer Options

A. Assets increase by 20,000, Liabilities increase by 20,000, and Equity increases by 20,000
Correct Answer B. Assets increase by 20,000, Liabilities decrease by 20,000, and Equity increases by 20,000
C. Assets decrease by 20,000, Liabilities increase by 20,000, and Equity decreases by 20,000
D. Assets decrease by 20,000, Liabilities decrease by 20,000, and Equity decreases by 20,000
Correct Answer
B
Correct Option:
Assets increase by 20,000, Liabilities decrease by 20,000, and Equity increases by 20,000

About This Question

This is Post Utme Joseph Ayo Babalola University 2025 Accounting Question 7. It is one of the objective questions from the 2025 Post Utme Joseph Ayo Babalola University Accounting examination.

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