What are the correct answers for the following? What is the effect on the balanc

Question

What are the correct answers for the following?

What is the effect on the balance sheet if a company purchases equipmient using cash? No effect on total assets; Decrease total iabilities: ncrease total stockholders equity Decrease total assets; No effect on total liabilities: Increase total stockholders' equity Increase total assets; Increase total liabilities: Increase total stockholders' equity No effect on total assets; No effect on total liabilities: No effect on total stockholders' equity Mauricio invested $30,000 in Pizza Aroma in exchange for its stock. As a result of this, Pizza Aroma now has: an asset (investment retained earnings net income. common stock. a liability. If a company hires an auditor to check that the work done by others within the company is supported by documentation, it is doing so under the principle of control activities referred to as: document procedures. segregation of duties. restrict access. independent verification. Which account would be decreased with a credit? Sales Accounts Receivable Notes Payable Common Stock

Explanation / Answer

Answer to question 1

There will be no effect on the total assets of company because one asset cash is reduced and other fixed asset is acquired by the same amount.both effect of transaction will be in asset side hence no effect on the liability side as well as the stockholder equity.

Option 4 is correct .

Answer to 2 question.

Pizza aroma has to issue common stock to Mauricio.because Mauricio has invested in pizza aroma.

Option 4 Is correct .

ANSWER to question 3

As the company hired a an independent person to check the work done by the internal staff is known as independent verification.

Option 4 is correct.

ANSWER to question 4

An asset account is reduces with the credit. And only asset is given in option is accounts receivable.

Option 2 is correct.

ANSWER to question 5.

It will increase company liability as now company is obliged to pay 1.2 million.and advertisement will give benefits in future so it will also be recorded as defered assets.

Option 1is correct.

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