Neco 2019 Financial Accounting Question 36

Practice objective / multiple choice question 36 from the 2019 Neco Financial Accounting examination.

Neco 2019 Financial Accounting Objective / Multiple Choice Easy Difficulty

Question 36 NECO • 2019 • FINANCIAL_ACCOUNTING • objective

A company purchases equipment for \(\text{₦}500,000\) cash. Explain the effect of this transaction on the fundamental accounting equation \(\text{Assets}=\text{Liabilities}+\text{Equity}\).

A. Assets: Equipment \\(+\\text{₦}500,000\\), Cash \\(-\\text{₦}500,000\\); Equity increases \\(+\\text{₦}500,000\\), Liabilities unchanged.

Correct Answer B. Assets: Equipment \(+\text{₦}500,000\), Cash \(-\text{₦}500,000\); Liabilities and Equity unchanged (no net effect).

C. Assets: Equipment \\(+\\text{₦}500,000\\), Cash unchanged; Liabilities and Equity unchanged.

D. Assets: Equipment \\(+\\text{₦}500,000\\), Cash \\(-\\text{₦}500,000\\); Liabilities increase \\(+\\text{₦}500,000\\), Equity unchanged.

Correct Answer

Correct Option:

Assets: Equipment \(+\text{₦}500,000\), Cash \(-\text{₦}500,000\); Liabilities and Equity unchanged (no net effect).

This is Neco 2019 Financial Accounting Question 36. It is one of the objective questions from the 2019 Neco Financial Accounting examination.

Difficulty level: Easy .

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