Which of the Following Situations Describes a Person Who Could

question 109

Multiple Choice

Which of the following situations describes a person who could be insolvent?

• A) Assets $56,000; annual expenses $60,000
• B) Assets $78,000; net worth $22,000
• C) Liabilities $45,000; net worth $6,000
• D) Assets $40,000; liabilities $45,000
• E) Annual cash inflows $45,000; liabilities $50,000

Distinguish between the components of the general journal and their purposes.

Understand the implications of debiting and crediting specific accounts in accounting transactions.

Interpret the recording of transactions not previously billed or recorded in revenue collections.

Recognize the treatment of accounts payable and receivable in various transactions.