50. If a company pays $17,000 for an expense with cash: A) Total assets will dec
ID: 2598799 • Letter: 5
Question
50. If a company pays $17,000 for an expense with cash: A) Total assets will decrease. B) Retained earnings will decrease. C) Owners' equity will decrease. D) All three of the above statements are true. 51. Intangible assets are assets used in business operations but which: A) Lack physical substance. B) Cannot be sold C) Have been depreciated below their estimated salvage values. D) Cannot be specifically identified. 52. Dividends declared: A) Reduce retained earnings. B) Increase retained eanings. C) Reduce net income D) Increase net income Use the following to answer questions 53-57: Orange Kola, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: Quantity-T-UntCost__ Total cost 18 an. 11 12 15 156 Purchase (Uan. 20) Total 21 3 651 On January 14, Orange Kola, Inc. sold 24 units of this product. The other 28 units remained in inventory at January 31. 53. Assuming that Orange Kola uses the LIFO flow assumption, the 28 units of this product in inventory at January 31 have a total cost of A) $399 B) $385, C) $349 D) Some other amountExplanation / Answer
50.
Cash is an asset. When an expense is paid by cash, the balance of cash will decrease and the balance of the expense account will increase. Decrease in the balance of cash will result in a decrease in total assets. Increase in the balance of an expense will result in a decrease in net income. Decrease in net income will result in a decrease in retianed earnings and a decrease in retained earnings will result in decrease in owners' equity because retained earnings are part of owners' equity.
Therefore, all the three statements given in the question are true. The correct answer is D.
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