Multiple Choice 1.10 – p.128
1) Retained Earnings is not
a) Increased by net income
b) Decreased by expenses
c) Increased by revenues
d) Decreased by dividends declared
e)*** Decreased by gains and losses

2) Which of the following transactions resulted in a $35,000 increase in assets and a $35,000 increase in liabilities?
a. Collected accounts receivable of $35,000
b. Paid accounts payable of $35,000
c.*** Purchased land for $50,000, paying $15,000 in cash as a down payment and signing a note payable for the balance
d. Purchased on account, and used, $35,000 worth of office supplies during the period
e. Reclassified a $35,000 account receivable as a note receivable when the customer failed to pay on time

3) Which of the following is not a correct expression of the accounting equation?
a) Assets = Liabilities + Stockholders’ Equity
b)*** Assets = Liabilities – Stockholders’ Equity
c) Assets = Liabilities + Paid-In Capital + Retained Earnings
d) Assets = Liabilities + Paid-In Capital + Revenues – Expenses
e) Assets – Liabilities = Stockholders’ Equity

4) Normal account balances are as follows:
a) Cash, Accounts Receivable, and Services Revenues are debits
b) Interest Expense, Wages Payable, and Retained Earnings are credits
c)*** Merchandise Inventory, Cost of Goods Sold, and Equipment are debits
d) Accumulated Depreciation, Cash, and Merchandise Inventory are debits
e) None of the above

5) Which of the following is not an example of source document?
a) Purchase Invoice
b)*** Chart of Accounts
c) Cash register tape printout
d) Receipt from sales register at the point of purchase
e) Check stub

6) Comparison of the balance sheet of Kohl Company at the end of 2014 with its balance sheet at the end of 2013 showed that total assets had decreased by $34,500 and stockholders’ equity had increased by $7,500. The change in liabilities