Question 1

Sue Shells,Inc.issues $400,000 in new stock.It later uses the cash received to purchase land.What accounts are affected by these two transactions?

Accepted Answer

A)  Common Stock,Cash,and Land.
B)  Common Stock,Cash,and Investments.
C)  Cash,Common Stock,and Investments,and Land.
D)  Common Stock,and Land.E) B) and C)
F) All of the above

Question 2

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Accepted Answer

A)  conservatism exception.
B)  separate entity assumption.
C)  cost principle.
D)  monetary unit assumption.E) None of the above
F) B) and C)

Question 3

Purrfect Pets,Inc. ,makes a $10,000 payment on account.This would result in a:

Accepted Answer

A)  $10,000 credit to Cash and a $10,000 credit to Accounts Payable.
B)  $10,000 debit to Cash and a $10,000 debit to Accounts Payable.
C)  $10,000 debit to Accounts Payable and a $10,000 credit to Cash.
D)  $10,000 debit to Cash and a $10,000 credit to Accounts Payable.E) B) and C)
F) B) and D)

Question 4

The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. Which of the following statements is not correct?

Accepted Answer

A)  Total Assets are $964,900.
B)  Total Stockholders' equity is $565,130.
C)  Noncurrent liabilities are $65,130.
D)  The amount of current assets is 2.5 times the amount of current liabilities.E) A) and D)
F) C) and D)

Question 5

Each account is assigned a number;this listing of all accounts is called a:

Accepted Answer

A)  trial balance.
B)  journal.
C)  ledger.
D)  chart of accounts.E) C) and D)
F) A) and C)

Question 6

Match the term with its definition.(There are more definitions than terms. ) 
-Accounts Payable

Accepted Answer

A)  The abbreviation for an item posted on the left side of a T-account.
B)  A balance sheet that has not yet been publicly released.
C)  A transaction that is triggered automatically merely by the passage of time.
D)  When a company becomes included in the Fortune 500.
E)  The account credited when cash is received in exchange for stock issued.F) The value of a company's public relations campaign.G) An event that has no effect on the balance sheet and is not recorded in the financial statements.H) A balance sheet that has assets and liabilities categorized as current vs.noncurrent.I) Amounts owed to suppliers for goods or services bought on credit.J) The abbreviation for an item posted on the right side of a T-account.K) An exchange or event that has a direct impact on a company's financial statements.L) Liabilities divided by assets.M) Another name for stockholders' equity or shareholders' equity.N) A method of recording a transaction in debit/credit format.O) The expression that assets must equal liabilities plus stockholders' equity.P) E) and J)
Q) D) and N)

Question 7

A(n) ________ is a collection of records that summarizes the effects of multiple transactions whereas a(n) ________ is a record of each day's transactions.

Accepted Answer

A)  ledger;journal
B)  journal;ledger
C)  trial balance;journal
D)  trial balance;ledgerE) None of the above
F) B) and D)

Question 8

The record-analyze-summarize process is applied only to daily transactions,month-end adjustments need not be analyzed and summarized.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about liabilities is not correct?

Accepted Answer

A)  Liabilities are amounts owed by a business.
B)  Liability accounts have a normal credit balances.
C)  Financing activities may affect the amount of liabilities.
D)  Examples of liabilities include Notes Payable,Common Stock,and Income Tax Payable.E) B) and C)
F) All of the above

Question 10

Constable Co.reported the following information at December 31,Year 1:   Accounts Payable $,750 Accounts Receivable 14,025 Cash 35,235 Common Stock 135,000 Equipment 74,250 Inventory 46,800 Notes Payable due December 31, Year 3 3,750 Retained Earnings, December 31, Year 1 21,135 Wages Payable 3,675\begin{array}{lr}	ext { Accounts Payable } & \$, 750 \	ext { Accounts Receivable } & 14,025 \	ext { Cash } & 35,235 \	ext { Common Stock } & 135,000 \	ext { Equipment } & 74,250 \	ext { Inventory } & 46,800 \	ext { Notes Payable due December 31, Year 3 } & 3,750 \	ext { Retained Earnings, December 31, Year 1 } & 21,135 \	ext { Wages Payable } & 3,675\end{array} Accounts Payable  Accounts Receivable  Cash  Common Stock  Equipment  Inventory  Notes Payable due December 31, Year 3  Retained Earnings, December 31, Year 1  Wages Payable ​$,75014,02535,235135,00074,25046,8003,75021,1353,675​  What is the total of the credit balance accounts?

Accepted Answer

A)  $166,560
B)  $156,135
C)  $170,310
D)  $162,885 E) None of the above
F) A) and C)

Question 11

The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

Accepted Answer

A)  Equity financing refers to the money obtained through owners' contributions and reinvestments of profit.
B)  Debt financing refers to the money obtained through loans.
C)  The business is obligated to repay debt financing.
D)  The business is obligated to repay equity financing.E) A) and B)
F) B) and C)

Question 12

A company was formed with $300,000 cash contributed by its owners in exchange for common stock.The company borrowed $150,000 from a bank.The company purchased $50,000 of inventory and paid cash for it.The company also purchased $350,000 of equipment by paying $50,000 in cash and issuing a note for the remainder. What is the amount of the total liabilities to be reported on the balance sheet?

Accepted Answer

A)  $300,000
B)  $0
C)  $450,000
D)  $400,000E) All of the above
F) C) and D)

Question 13

For each of the following,indicate how the event would most likely be categorized.
-The stock market rises 10% and the value of a company's stock increases.

Accepted Answer

A)  NT - No Transaction
B)  EE - External Exchange
C)  IE - Internal EventD) B) and C)
E) A) and C)

Question 14

Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?

Accepted Answer

A)  The cost principle
B)  The accounting equation
C)  The separate entity concept
D)  The monetary conceptE) A) and D)
F) A) and C)

Question 15

Consider the following account balances of Evan McGruder,Inc. ,as of December 31,Year 3:
 $\begin{array}{lrlll}
\text { Accounts Payable } & \$ 298,500 & \text { Retained Earnings } & 136,750 \
\text { Equipment } & 1,054,00 \mathrm{C} & \text { Notes Payable, due Year 5 } & 858,00 \mathrm{C} \
\text { Common Stock } & 500,00 \mathrm{C} & \text { Accounts Receivable } & 506,250 \
\text { Income Tax Payable } & 9,75 \mathrm{C} & \text { Cash } & 242,750
\end{array}$ Required:
Prepare a classified balance sheet at December 31,Year 3.

Accepted Answer

The answer of Consider the following account balances of Evan...

Question 16

Equity financing is financing obtained from:

Accepted Answer

A)  creditors.
B)  stockholders.
C)  selling goods or services on credit.
D)  both creditors and stockholders.E) B) and D)
F) B) and C)

Question 17

Carol Co.has total debits in its cash T-account of $155,000 and total credits of $120,000.The balance in the cash T-account is a:

Accepted Answer

A)  debit of $155,000.
B)  debit of $35,000.
C)  credit of $120,000.
D)  credit of $35,000.E) C) and D)
F) A) and C)

Question 18

If land is purchased for cash:

Accepted Answer

A)  total assets will increase.
B)  total assets will decrease.
C)  total assets will remain the same.
D)  stockholders' equity will increase.E) A) and B)
F) A) and C)

Question 19

Which of the following statements about the concepts underlying the balance sheet is correct?

Accepted Answer

A)  A company bought land for $5 million dollars 10 years ago.The land is now worth $15 million.The company should increase the book value of this asset on its balance sheet to reflect its current value.
B)  All events affecting the current value of a company are reported on the balance sheet.
C)  According to the cost principle,assets are valued at their replacement cost.
D)  If an asset's value increases,the increase in value is generally not recorded under GAAP.E) A) and C)
F) A) and B)

Question 20

How will a company's current ratio be affected by the purchase of equipment for cash?

Accepted Answer

A)  The current ratio will increase because current assets increase.
B)  The current ratio will decrease because current liabilities increase.
C)  The current ratio will decrease because current assets decrease.
D)  The current ratio will remain unchanged.E) B) and D)
F) All of the above

Exam 2: The Balance Sheet

How will a company's current ratio be affected by the purchase of equipment for cash?

Correct Answer
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Equity financing is financing obtained from:

Correct Answer
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A(n) is a collection of records that summarizes the effects of multiple transactions whereas a(n) is a record of each day's transactions.

Correct Answer
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Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?

Correct Answer
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Which of the following statements about the concepts underlying the balance sheet is correct?

Correct Answer
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Match the term with its definition.(There are more definitions than terms. ) -Accounts Payable

Correct Answer
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The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

Correct Answer
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Sue Shells,Inc.issues $400,000 in new stock.It later uses the cash received to purchase land.What accounts are affected by these two transactions?

Correct Answer
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The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Correct Answer
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For each of the following,indicate how the event would most likely be categorized. -The stock market rises 10% and the value of a company's stock increases.

Correct Answer
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Correct Answer
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Each account is assigned a number;this listing of all accounts is called a:

Correct Answer
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Which of the following statements about liabilities is not correct?

Correct Answer
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The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. Which of the following statements is not correct?

Correct Answer
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The record-analyze-summarize process is applied only to daily transactions,month-end adjustments need not be analyzed and summarized.

Correct Answer
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Carol Co.has total debits in its cash T-account of $155,000 and total credits of $120,000.The balance in the cash T-account is a:

Correct Answer
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If land is purchased for cash:

Correct Answer
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Correct Answer
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Purrfect Pets,Inc. ,makes a $10,000 payment on account.This would result in a:

Correct Answer
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Exam 2: The Balance Sheet

How will a company's current ratio be affected by the purchase of equipment for cash?

Correct AnswerverifiedShow Answer

Equity financing is financing obtained from:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A(n) ________ is a collection of records that summarizes the effects of multiple transactions whereas a(n) ________ is a record of each day's transactions.

Correct AnswerverifiedShow Answer

Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?

Correct AnswerverifiedShow Answer

Which of the following statements about the concepts underlying the balance sheet is correct?

Correct AnswerverifiedShow Answer

Match the term with its definition.(There are more definitions than terms. ) -Accounts Payable

Correct AnswerverifiedShow Answer

The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Sue Shells,Inc.issues $400,000 in new stock.It later uses the cash received to purchase land.What accounts are affected by these two transactions?

Correct AnswerverifiedShow Answer

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Correct AnswerverifiedShow Answer

For each of the following,indicate how the event would most likely be categorized. -The stock market rises 10% and the value of a company's stock increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each account is assigned a number;this listing of all accounts is called a:

Correct AnswerverifiedShow Answer

Which of the following statements about liabilities is not correct?

Correct AnswerverifiedShow Answer

The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The record-analyze-summarize process is applied only to daily transactions,month-end adjustments need not be analyzed and summarized.

Correct AnswerverifiedShow Answer

Carol Co.has total debits in its cash T-account of $155,000 and total credits of $120,000.The balance in the cash T-account is a:

Correct AnswerverifiedShow Answer

If land is purchased for cash:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Purrfect Pets,Inc. ,makes a $10,000 payment on account.This would result in a:

Correct AnswerverifiedShow Answer

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A(n) is a collection of records that summarizes the effects of multiple transactions whereas a(n) is a record of each day's transactions.

Correct Answer
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