Question 1

Dividends are an example of an expense.

Accepted Answer

A) True 
 B)False  False

Question 2

Dim Co.issues common stock of $15,000.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?​

Accepted Answer

A)  ​The transaction increases the liquidity and decreases the profitability of the company. 
B)  ​The transaction decreases the liquidity and increases the profitability of the company. 
C)  ​The transaction increases the liquidity and has no effect on the profitability of the company. 
D)  ​The transaction has no effect on the liquidity and increases the profitability of the company. 
A)  ​The transaction increases the liquidity and decreases the profitability of the company. 
B)  ​The transaction decreases the liquidity and increases the profitability of the company. 
C)  ​The transaction increases the liquidity and has no effect on the profitability of the company. 
D)  ​The transaction has no effect on the liquidity and increases the profitability of the company. C

Question 3

Declaring and paying cash dividends affects which account/ accounts?

Accepted Answer

A)  Cash only 
B)  Common stock only 
C)  Cash and retained earnings 
D)  Cash and common stock 
A)  Cash only 
B)  Common stock only 
C)  Cash and retained earnings 
D)  Cash and common stock C

Question 4

Which of the following transactions changes the mix of only liabilities?

Accepted Answer

A)  Paying off accounts payables by raising a short-term loan 
B)  Writing off accounts receivable as bad debt 
C)  Financing the purchase of land with a long-term loan 
D)  Paying accounts receivable with cash 
A)  Paying off accounts payables by raising a short-term loan 
B)  Writing off accounts receivable as bad debt 
C)  Financing the purchase of land with a long-term loan 
D)  Paying accounts receivable with cash

Question 5

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

Accepted Answer

A) True 
 B)False

Question 6

The gross increases in stockholders' equity attributable to business activities are called:

Accepted Answer

A)  assets. 
B)  liabilities. 
C)  revenues. 
D)  net income. 
A)  assets. 
B)  liabilities. 
C)  revenues. 
D)  net income.

Question 7

If liabilities have a balance of $10,000 and stockholders' equity has a balance of $60,000, then assets must have a balance of:

Accepted Answer

A)  $50,000. 
B)  $60,000. 
C)  $70,000. 
D)  $10,000. 
A)  $50,000. 
B)  $60,000. 
C)  $70,000. 
D)  $10,000.

Question 8

Fees earned and received in cash will increase cash flows from operating activity as well as retained earnings.

Accepted Answer

A) True 
 B)False

Question 9

For EFG Co., the transaction "receipt of interest income" would:

Accepted Answer

A)  increase total assets. 
B)  decrease total assets. 
C)  have no effect on total assets. 
D)  decrease total liabilities. 
A)  increase total assets. 
B)  decrease total assets. 
C)  have no effect on total assets. 
D)  decrease total liabilities.

Question 10

Paying expenses affects which financial statement elements?

Accepted Answer

A)  Assets only 
B)  Stockholders' equity only 
C)  Assets and stockholders' equity 
D)  Assets and liabilities 
A)  Assets only 
B)  Stockholders' equity only 
C)  Assets and stockholders' equity 
D)  Assets and liabilities

Question 11

Johnson, Inc.purchased land for cash.What effect does this transaction have?

Accepted Answer

A)  Increase in Cash and decrease in Land 
B)  Decrease in Cash and decrease in Land 
C)  Increase in Cash and increase in Land 
D)  Decrease in Cash and increase in Land 
A)  Increase in Cash and decrease in Land 
B)  Decrease in Cash and decrease in Land 
C)  Increase in Cash and increase in Land 
D)  Decrease in Cash and increase in Land

Question 12

A common-sized balance sheet is prepared by expressing each asset as a percent of:

Accepted Answer

A)  total current assets. 
B)  total assets. 
C)  total long-term assets. 
D)  total liabilities. 
A)  total current assets. 
B)  total assets. 
C)  total long-term assets. 
D)  total liabilities.

Question 13

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Accepted Answer

A) True 
 B)False

Question 14

Any given transaction must affect at least two different parts of the accounting equation.

Accepted Answer

A) True 
 B)False

Question 15

Following are the summaries of balance sheet of LCF Company: $$\begin{array} { l c c } 
& \text { Total Assets } & \text { Total Liabilities } \
\text { Beginning of the year } & \$ 250,000 & \$ 180,000 \
\text { End of the year } & \$ 500,000 & \$ 370,000
\end{array}$$ Determine the net income (or loss) for the year, assuming $80,000 of common stock was issued and no dividends were paid during the year?

Accepted Answer

A)  $140,000 
B)  ($20,000) 
C)  $160,000 
D)  ($60,000) 
A)  $140,000 
B)  ($20,000) 
C)  $160,000 
D)  ($60,000)

Question 16

On a statement of cash flows, each cash transaction is recorded and classified as an operating, investing, or financing activity.

Accepted Answer

A) True 
 B)False

Question 17

Inventory is less liquid than:

Accepted Answer

A)  accounts receivable. 
B)  land. 
C)  plant and equipment. 
D)  patents. 
A)  accounts receivable. 
B)  land. 
C)  plant and equipment. 
D)  patents.

Question 18

Accounts receivable is less liquid than Furniture, so it is listed after Furniture on a balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

The statement of shareholders' equity is prepared:

Accepted Answer

A)  before the preparation of the income statement. 
B)  after the preparation of the statement of cash flows. 
C)  before the preparation of the balance sheet. 
D)  after the audit of the financial statements. 
A)  before the preparation of the income statement. 
B)  after the preparation of the statement of cash flows. 
C)  before the preparation of the balance sheet. 
D)  after the audit of the financial statements.

Question 20

Flow Inc.received cash from fees earned.How does this transaction affect the Statement of Cash Flows?

Accepted Answer

A)  Increase cash from Operating Activities 
B)  Increase cash from Investing Activities 
C)  Increase cash from Financing Activities 
D)  No effect on the Statement of Cash Flows 
A)  Increase cash from Operating Activities 
B)  Increase cash from Investing Activities 
C)  Increase cash from Financing Activities 
D)  No effect on the Statement of Cash Flows

Dividends are an example of an expense.

Dim Co.issues common stock of $15,000.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?

Declaring and paying cash dividends affects which account/ accounts?

Which of the following transactions changes the mix of only liabilities?

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

The gross increases in stockholders' equity attributable to business activities are called:

If liabilities have a balance of $10,000 and stockholders' equity has a balance of $60,000, then assets must have a balance of:

Fees earned and received in cash will increase cash flows from operating activity as well as retained earnings.

For EFG Co., the transaction "receipt of interest income" would:

Paying expenses affects which financial statement elements?

Johnson, Inc.purchased land for cash.What effect does this transaction have?

A common-sized balance sheet is prepared by expressing each asset as a percent of:

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Any given transaction must affect at least two different parts of the accounting equation.

On a statement of cash flows, each cash transaction is recorded and classified as an operating, investing, or financing activity.

Inventory is less liquid than:

Accounts receivable is less liquid than Furniture, so it is listed after Furniture on a balance sheet.

The statement of shareholders' equity is prepared:

Flow Inc.received cash from fees earned.How does this transaction affect the Statement of Cash Flows?

The Role of Accounting in Business

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 2: Basic Accounting Systems: Cash Basis

Dividends are an example of an expense.

Dim Co.issues common stock of $15,000.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?​

Declaring and paying cash dividends affects which account/ accounts?

Which of the following transactions changes the mix of only liabilities?

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

The gross increases in stockholders' equity attributable to business activities are called:

If liabilities have a balance of $10,000 and stockholders' equity has a balance of $60,000, then assets must have a balance of:

Fees earned and received in cash will increase cash flows from operating activity as well as retained earnings.

For EFG Co., the transaction "receipt of interest income" would:

Paying expenses affects which financial statement elements?

Johnson, Inc.purchased land for cash.What effect does this transaction have?

A common-sized balance sheet is prepared by expressing each asset as a percent of:

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Any given transaction must affect at least two different parts of the accounting equation.

On a statement of cash flows, each cash transaction is recorded and classified as an operating, investing, or financing activity.

Inventory is less liquid than:

Accounts receivable is less liquid than Furniture, so it is listed after Furniture on a balance sheet.

The statement of shareholders' equity is prepared:

Flow Inc.received cash from fees earned.How does this transaction affect the Statement of Cash Flows?

The Role of Accounting in Business

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Dim Co.issues common stock of $15,000.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?