A-LevelAccountingThe accounting cycle9706/12 · Feb/Mar 2021 · Q21 Mark

On 1 May, Tom sold an old motor vehicle with a net book value of $10000 to Arnold for $12000. Arnold paid $7500 by cheque and agreed to pay the balance by instalments. What was the net effect of these transactions on Arnold's accounting equation on 1 May? assets $ liabilities $ owner's equity /capital $

Aincrease 2500 increase 2500 no effect

Bincrease 2500 increase 4500 decrease 2000

Cincrease 4500 increase 2500 increase 2000

Dincrease 4500 increase 4500 no effect

✓ Correct answer

D: increase 4500 increase 4500 no effect

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Topic: The accounting cycle, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Feb/Mar 2021 Paper 1 Variant 2, question 2.

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