Question 1

Which of the following would cause a trial balance to be out of balance?

Accepted Answer

A)   A transaction was recorded twice.
B)   A transaction was not recorded.
C)   A transaction was posted to the wrong accounts.
D)   Only the credit of a transaction was recorded.E) A) and B)
F) A) and C)

Question 2

Which of the following is a financing activity?

Accepted Answer

A)   The business receives land and gives a check for $1,000.
B)   The business receives $1,000 cash and in exchange gives a promissory note.
C)   The business promises to hire an employee on the 15ᵗʰ of the month.
D)   The business orders supplies and promises to pay for them at the end of the month.E) B) and C)
F) A) and B)

Question 3

Who has first claim to a business's assets should the company go out of business?

Accepted Answer

A)   Creditors
B)   Stockholders
C)   Customers
D)   ManagementE) A) and D)
F) C) and D)

Question 4

Identify the account title that may be used to record borrowing cash in exchange for a promissory note.

Accepted Answer

A)   Note Payable
B)   Stock Certificate
C)   Retained Earnings
D)   Common StockE) A) and C)
F) All of the above

Question 5

An accounting system is referred to as a double-entry system because:

Accepted Answer

A)   both what is received and what is given in exchange are recorded.
B)   transactions are recorded in both the journal and ledger.
C)   all entries are checked twice to ensure accuracy.
D)   transactions are recorded twice by separate individuals to ensure accuracy.E) A) and B)
F) B) and D)

Question 6

Which of the following statements about the debit/credit framework is correct?

Accepted Answer

A)   Asset and liability accounts have a normal debit balance.
B)   To debit an account means to increase it.
C)   Common Stock has a normal credit balance.
D)   To credit an account means to decrease it.E) B) and D)
F) All of the above

Question 7

A chart of accounts is a:

Accepted Answer

A)   list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named.
B)   list of daily transactions showing the accounts debited and credited for each transaction.
C)   summary of each account's activity and its ending balance.
D)   list of each account and its balance at a point in time.E) B) and C)
F) A) and C)

Question 8

_________________ are of special importance because they are the only activities that enter the financial accounting system.

Accepted Answer

A)   External exchanges
B)   Internal events
C)   Documents
D)   TransactionsE) A) and B)
F) A) and C)

Question 9

A journal does all of the following except:

Accepted Answer

A)   summarizes all of the transactions that affect one account.
B)   records all purchases and sales of assets of a company.
C)   records each day's transactions.
D)   records all the revenues and expenses of a company.E) B) and C)
F) A) and C)

Question 10

Which of the following applies to Accounts Payable?

Accepted Answer

A)   They can be outstanding for more than one year.
B)   They charge interest.
C)   It is an amount a business is obligated to repay.
D)   They are documented using formal documents.E) B) and C)
F) A) and D)

Question 11

In Year 2,the Denim Company bought an acre of land that cost $15,000.In Year 5,another company purchased a nearby acre of land for $28,000 and a different company purchased another nearby acre of land for $26,000.As a result,an appraiser estimated hat the acre owned by Denim had increased in value to $27,000.If Denim prepares a balance sheet at the end of Year 5,the acre of land that it owns should be reported at:

Accepted Answer

A)   $15,000.
B)   $28,000.
C)   $18,000.
D)   the average of all of the amounts.E) B) and C)
F) None of the above

Question 12

For each of the following,indicate how the event would most likely be categorized.
EVENT
______ (1)A company sells $2 million in goods for immediate payment.
______ (2)The company uses up office supplies.
______ (3)The stock market rises 10% and the value of a company's stock increases.
______ (4)A company pays cash to an inventor for the legal rights to produce a new product.
______ (5)Management promises to pay workers an overtime bonus as required by their union contract.
______ (6)A company uses up supplies to manufacture a product.
______ (7)A company receives $1 million in orders but no down payments.
CATEGORY
EE - External Exchange
IE - Internal Event
NT - No Transaction

Accepted Answer

(1)EE
(2)I...

Question 13

Which of the following would be classified as a noncurrent liability on the balance sheet at December 31,Year 1?

Accepted Answer

A)   An accounts payable due on January 30, Year 2
B)   A notes payable due November 30, Year 2
C)   A note receivable that matures on April 30, Year 3
D)   A notes payable due January 15, Year 3E) None of the above
F) All of the above

Question 14

A company purchased equipment for use in the business at a cost of $12,000,one-fourth was paid in cash,and the company signed a note for the balance.The journal entry to record this transaction will include a:

Accepted Answer

A)   debit to Notes Payable of $9,000.
B)   debit to Cash of $12,000.
C)   credit to Notes Payable of $9,000.
D)   debit to Equipment of $3,000.E) B) and D)
F) A) and B)

Question 15

Transactions are first entered in the:

Accepted Answer

A)   ledger.
B)   journal.
C)   T-accounts.
D)   chart of accounts.E) All of the above
F) A) and C)

Question 16

Which of the following statements regarding posting and classification is correct?

Accepted Answer

A)   Posting journal entries involves copying the dollar amounts from the ledger into the journal.
B)   If a $100 debit is erroneously posted to an account as a $100 credit, the accounts will be out of balance by $100.
C)   If a $5,000 credit to a stockholders' equity account is misclassified as a $5,000 credit to a liability, the accounting equation will still balance.
D)   If a purchase of supplies on account for $100 is recorded with a debit to Supplies of $10 and a credit to Accounts Payable for $10, the accounting equation will not balance.E) None of the above
F) B) and C)

Question 17

Which of the following requires a credit?

Accepted Answer

A)   Decreases in liabilities
B)   Decreases in stockholders' equity
C)   Increases to assets
D)   Increases to liabilitiesE) C) and D)
F) B) and D)

Question 18

A trial balance:

Accepted Answer

A)   ensures that all journal entries have been posted.
B)   is a way to check that no mistakes have been made during the accounting cycle.
C)   is a report for internal use only.
D)   is a way to check that all journal entries have been posted and that no mistakes have been made during the accounting cycle.E) A) and D)
F) None of the above

Question 19

Which account would be decreased with a credit?

Accepted Answer

A)   Cash
B)   Accounts Payable
C)   Common Stock
D)   Retained EarningsE) All of the above
F) A) and B)

Question 20

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

Accepted Answer

A)   An item on a balance sheet that is labeled as "payable" is a liability of that company.
B)   Assets are listed on the balance sheet in alphabetical order.
C)   The balance sheet balances when assets plus liabilities equal stockholders' equity.
D)   The balance sheet proves that asset debits = liability credits.E) B) and D)
F) B) and C)

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

A chart of accounts is a:

Correct Answer
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Who has first claim to a business's assets should the company go out of business?

Correct Answer
verified

Which of the following applies to Accounts Payable?

Correct Answer
verified

Which of the following statements regarding posting and classification is correct?

Correct Answer
verified

Which of the following statements about the debit/credit framework is correct?

Correct Answer
verified

A company purchased equipment for use in the business at a cost of $12,000,one-fourth was paid in cash,and the company signed a note for the balance.The journal entry to record this transaction will include a:

Correct Answer
verified

A trial balance:

Correct Answer
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Transactions are first entered in the:

Correct Answer
verified

An accounting system is referred to as a double-entry system because:

Correct Answer
verified

A journal does all of the following except:

Correct Answer
verified

Which of the following requires a credit?

Correct Answer
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Correct Answer
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Correct Answer
verified
(1)EE
(2)I...
View Answer

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

Correct Answer
verified

Which of the following would cause a trial balance to be out of balance?

Correct Answer
verified

Which of the following would be classified as a noncurrent liability on the balance sheet at December 31,Year 1?

Correct Answer
verified

Which account would be decreased with a credit?

Correct Answer
verified

Which of the following is a financing activity?

Correct Answer
verified

_________________ are of special importance because they are the only activities that enter the financial accounting system.

Correct Answer
verified

Identify the account title that may be used to record borrowing cash in exchange for a promissory note.

Correct Answer
verified

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

A chart of accounts is a:

Correct AnswerverifiedShow Answer

Who has first claim to a business's assets should the company go out of business?

Correct AnswerverifiedShow Answer

Which of the following applies to Accounts Payable?

Correct AnswerverifiedShow Answer

Which of the following statements regarding posting and classification is correct?

Correct AnswerverifiedShow Answer

Which of the following statements about the debit/credit framework is correct?

Correct AnswerverifiedShow Answer

A company purchased equipment for use in the business at a cost of $12,000,one-fourth was paid in cash,and the company signed a note for the balance.The journal entry to record this transaction will include a:

Correct AnswerverifiedShow Answer

A trial balance:

Correct AnswerverifiedShow Answer

Transactions are first entered in the:

Correct AnswerverifiedShow Answer

An accounting system is referred to as a double-entry system because:

Correct AnswerverifiedShow Answer

A journal does all of the following except:

Correct AnswerverifiedShow Answer

Which of the following requires a credit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified(1)EE(2)I...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would cause a trial balance to be out of balance?

Correct AnswerverifiedShow Answer

Which of the following would be classified as a noncurrent liability on the balance sheet at December 31,Year 1?

Correct AnswerverifiedShow Answer

Which account would be decreased with a credit?

Correct AnswerverifiedShow Answer

Which of the following is a financing activity?

Correct AnswerverifiedShow Answer

_________________ are of special importance because they are the only activities that enter the financial accounting system.

Correct AnswerverifiedShow Answer

Identify the account title that may be used to record borrowing cash in exchange for a promissory note.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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(1)EE
(2)I...
View Answer

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