Liz, After Qualifying at University and Having Several Years' Experience

question 13

Multiple Choice

Liz, after qualifying at university and having several years' experience decides to set up her own dental practice. On 1 March she deposits $25 000 into a bank account she has opened for the practice. Which of the following represents the effect of this transaction on the accounting equation?

• A) Increase in assets of $25 000; increase in equity of $25 000.
• B) Increase in assets of $25 000; decrease in equity of $25 000.
• C) Increase in assets of $25 000; increase in liabilities of $25 000.
• D) Decrease in assets of $25 000; increase in equity of $25 000.

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Definitions:

Cost Comparisons

The analysis and review of different costs associated with performing various operations or producing different products within a business.

External Reporting

The preparation and disclosure of financial and other performance information by a company to external stakeholders, including regulators, investors, creditors, and the public.

Predetermined Fixed Overhead Rate

A rate estimated at the beginning of an accounting period to allocate fixed overhead costs to products or services based on a defined activity base.

Cost Of Goods Manufactured

The total production cost of goods completed and made ready for sale during a specific period.