Gce Model Questions Vol1 2025 Financial Accounting Question 11

Practice objective / multiple choice question 11 from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 11 GCE_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

A company purchases equipment for cash costing \(\text{₦}150,000\). It also receives a loan of \(\text{₦}50,000\) which is immediately used to pay a supplier invoice of \(\text{₦}30,000\). Determine the net effect of these transactions on the accounting equation \(\text{Assets}=\text{Liabilities}+\text{Equity}\). Express your answer as the change in Assets, Liabilities and Equity.

Answer Options

A. Assets increase \(\text{₦}50,000\); Liabilities increase \(\text{₦}20,000\); Equity decrease \(\text{₦}30,000\).
Correct Answer B. Assets increase \(\text{₦}20,000\); Liabilities increase \(\text{₦}20,000\); Equity unchanged.
C. Assets increase \(\text{₦}20,000\); Liabilities unchanged; Equity increase \(\text{₦}20,000\).
D. Assets increase \(\text{₦}20,000\); Liabilities increase \(\text{₦}10,000\); Equity increase \(\text{₦}10,000\).
Correct Answer
B
Correct Option:
Assets increase \(\text{₦}20,000\); Liabilities increase \(\text{₦}20,000\); Equity unchanged.

About This Question

This is Gce Model Questions Vol1 2025 Financial Accounting Question 11. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

View More Gce Model Questions Vol1 2025 Financial Accounting Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support