1. Why is important for a loan officer to determine the net worth of an individual or business before approving any requested loan 2. Define three types of business and state two examples each
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- 3. Which of the followingis an expense? A. Interest paid on loan B. Withdrawal of cash made by the owner C. Payment received for service rendered to customer D. Repayment of principal amount of a loanI. Multiple Choice Directions: Choose the letter corresponding to the correct answer for each of the questions provided below. 1. Accounts receivable or the amount to be received when a customer orders on account is an example of what account? b. Liability d. All of the above a. Asset c. Equity 2. Expenses incurred on paying utilities belong to what type of account? b. Liability d. All of the above a. Asset c. Equity 3. If Company A borrows money from company B, the transaction results to a. İncrease in asset of A and increase in asset in B b. Increase in asset of A and decrease in equity of B c. Increase in asset of A and no effect on assets of B d. Both B and C 4. Equity means assets minus liabilities. Other terms that can be used synonymously Q2with equity are the following except a. Capital b. Net assets d. Profit c. Net worth 5. Sources of legal obligation are the following except a. The law c. Debts • Source: Ferrer R.C. et.al. (2017). Fundamentals of Accountancy, Business and…When a customer eventually pays for items that have been purchased on credit, the transaction will affect: Select one: a. An asset and a liability b. An asset and an expense c. Two assets d. An asset and income
- Which one of the following is not a nominal account?A. purchases accountB. sales accountC. salaries accountD. cash account Which one of the following is a characteristic of a valid business transaction? A. It is an event measurable in terms of money B. It affects the financial position of the business C. It should be supported by a source document D. All of the aboveDirections: Choose the letter corresponding to the correct answer for each of the questionsprovided below.1. Accounts receivable or the amount to be received when a customer orders on accountis an example of what account?a. Asset c. Equityb. Liability d. All of the above2. Expenses incurred on paying utilities belong to what type of account?a. Asset c. Equityb. Liability d. All of the above3. If Company A borrows money from company B, the transaction results toa. Increase in asset of A and increase in asset in Bb. Increase in asset of A and decrease in equity of Bc. Increase in asset of A and no effect on assets of Bd. Both B and C4. Equity means assets minus liabilities. Other terms that can be used synonymously withequity are the following except :a. Capital c. Net worthb. Net assets d. Profit5. Sources of legal obligation are the following excepta. The law c. Debtsb. Contracts d. Other operation by lawQuestion 4.What do you know about Accounting Equation? Illustrate its mechanism byimaginary facts to prove that the two sides of the equation are always equal.Furthermore, what is Owner’s Equity? Give an equation for calculating owner’sequity.
- Distinguish between financial and nonfinancial transactions. Give three examples of each.Which of the following statements best describes financial instruments? Answer a. All financial instruments are a means of payment b. Financial instruments can transfer resources between people but not risk c. Financial instruments can transfer resources and risk between people d. Financial instruments can transfer risk but not resources between peopleCH2.LOT1. Which of the following is a prerequisite for modern business? Loan Credit Reinsurance Finance
- Multiple choice: 1. This includes money or its equivalent that is readily available for unrestricted use. A. Money expense B. Cash expense C. Cash D. Cash payable 2. Which of the following statements is correct? A. Financial accounting is the branch of accounting that deals with the specific needs of an entity’s management. B. The internal users of accounting information include management, owners and creditors. C. The external users of accounting information include potential and existing investors and lenders and other creditors. D. Government accounting is the branch of accounting that deals with the analysis of the costs of products and services.which of the following is an operating avtivity? A. billing customers for services rendered but not yet paid for B. paying off a loan to the bank C. purchasing equipment for cash D. receiving cash investments from ownersMatch each business activity with its description.Define accountingBusiness Activities Descriptions 1. Financing a. Transactions related to revenues and expenses. 2. Investing b. Transactions with lenders and owners. 3. Operating c. Transactions involving the purchase and sale of productive assets.