Question 1

All of the following would be classified as current on a classified balance sheet except:

Accepted Answer

A) Common Stock. 
B) Cash. 
C) Accounts Payable. 
D) Supplies. 
A) Common Stock. 
B) Cash. 
C) Accounts Payable. 
D) Supplies. A

Question 2

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. 
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. C

Question 3

Account titles in the chart of accounts are:

Accepted Answer

A) general purpose and do not indicate the nature of the account. 
B) consistent with those used by other companies. 
C) linked to account numbers. 
D) the names mandated for use by the FASB. 
A) general purpose and do not indicate the nature of the account. 
B) consistent with those used by other companies. 
C) linked to account numbers. 
D) the names mandated for use by the FASB. C

Question 4

On January 1,Kirk Corporation had total assets of $425,000.During the month,the following activities occurred: Kirk Corporation acquired equipment costing $3,000,promising to pay cash for it in 60 days.
Kirk Corporation purchased $1,750 of supplies for cash.
Kirk Corporation sold land,which it had acquired 2 years ago.The land had cost $7,500 and it was sold for $7,500 cash.
Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $500 per month.
What is the amount of total assets of Kirk Corporation at the end of the month?

Accepted Answer

A) $429,750 
B) $428,000 
C) $418,750 
D) $420,000 
A) $429,750 
B) $428,000 
C) $418,750 
D) $420,000

Question 5

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

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. 
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.

Question 6

A company borrows money from a bank.The journal entry to record the transaction would include a:

Accepted Answer

A) credit to Notes Payable and debit to Common Stock. 
B) debit to Cash and a credit to Notes Payable. 
C) debit to Cash and a credit to Common Stock. 
D) credit to Cash and a debit to Notes Payable. 
A) credit to Notes Payable and debit to Common Stock. 
B) debit to Cash and a credit to Notes Payable. 
C) debit to Cash and a credit to Common Stock. 
D) credit to Cash and a debit to Notes Payable.

Question 7

At the start of the first year of operations,Retained Earnings would be:

Accepted Answer

A) equal to zero. 
B) equal to Common Stock. 
C) equal to stockholders' equity. 
D) equal to the Net Income. 
A) equal to zero. 
B) equal to Common Stock. 
C) equal to stockholders' equity. 
D) equal to the Net Income.

Question 8

The cost principle is used:

Accepted Answer

A) to refer to the two sources of financing available to businesses. 
B) to measure the amount used to record assets on the date of the transaction. 
C) by small businesses,but not by large businesses. 
D) to measure internal events,but not external exchanges. 
A) to refer to the two sources of financing available to businesses. 
B) to measure the amount used to record assets on the date of the transaction. 
C) by small businesses,but not by large businesses. 
D) to measure internal events,but not external exchanges.

Question 9

For both accounts and amounts,the standard formatting for a journal entry lists:

Accepted Answer

A) credits first and then debits,both aligned to the left. 
B) credits first and then debits,indented underneath. 
C) debits first and then credits,both aligned to the right. 
D) debits first and then credits,indented to the right underneath. 
A) credits first and then debits,both aligned to the left. 
B) credits first and then debits,indented underneath. 
C) debits first and then credits,both aligned to the right. 
D) debits first and then credits,indented to the right underneath.

Question 10

Which of the following transactions for Bill's Fish 'n Chips restaurant would be treated as an accounting transaction?

Accepted Answer

A) Bill distributed coupons to local hotels for 10% off and requested that the coupons be distributed to hotel guests. 
B) Bill spoke to a local high school about the rewards and challenges of being an entrepreneur. 
C) Bill signed an agreement with a local fisherman to purchase 20 pounds of halibut each month. 
D) Bill purchased a fryer and a dishwasher,which will be paid for next month. 
A) Bill distributed coupons to local hotels for 10% off and requested that the coupons be distributed to hotel guests. 
B) Bill spoke to a local high school about the rewards and challenges of being an entrepreneur. 
C) Bill signed an agreement with a local fisherman to purchase 20 pounds of halibut each month. 
D) Bill purchased a fryer and a dishwasher,which will be paid for next month.

Question 11

A current asset is one that the company:

Accepted Answer

A) has owned for over one year. 
B) has owned for over five years. 
C) will use up or convert into cash in less than 12 months. 
D) has updated to reflect its current value. 
A) has owned for over one year. 
B) has owned for over five years. 
C) will use up or convert into cash in less than 12 months. 
D) has updated to reflect its current value.

Question 12

What is the ending balance of the Cash account?

Accepted Answer

A) $657,900 
B) $339,900 
C) $85,500 
D) $403,500 
A) $657,900 
B) $339,900 
C) $85,500 
D) $403,500

Question 13

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a higher ratio means better ability to pay.

Accepted Answer

A) True 
 B)False

Question 14

For each of the following,indicate how the event would most likely be categorized.
-A company pays cash to an inventor for the legal rights to produce a new product.

Accepted Answer

A) NT - No Transaction 
B) EE - External Exchange 
C) IE - Internal Event 
A) NT - No Transaction 
B) EE - External Exchange 
C) IE - Internal Event

Question 15

The company's total assets are $36,000.The following is a listing of the company's accounts and account balances as of December 31,Year 3.This company doesn't have any other accounts.
 $\begin{array}{lr}
\text { Accounts Payable } & \$ 7,000 \
\text { Accounts Receivable } & 8,000 \
\text { Supplies } & 1,000 \
\text { Equipment } & 22,000 \
\text { Common Stock } & 10,000 \
\text { Cash } & \text { Unknown } \
\text { Retained Earnings } & \text { Unknown }
\end{array}$ Required:
Part a.Determine the balance of the Cash account.
Part b.Determine the balance of the Retained Earnings account.

Accepted Answer

Part a.
Total Assets = Accounts Receivab

Question 16

Sue Shells,Inc.pays back $200,000 on a loan it had obtained earlier from a bank.

Accepted Answer

A) Assets decrease by $200,000;liabilities and stockholders' equity are both unchanged. 
B) Assets decrease by $200,000,liabilities decrease by $200,000,and stockholders' equity is unchanged. 
C) Assets decrease by $200,000 and liabilities increase by $200,000. 
D) Assets decrease by $200,000,liabilities are unchanged,and stockholders' equity decreases by $200,000. 
A) Assets decrease by $200,000;liabilities and stockholders' equity are both unchanged. 
B) Assets decrease by $200,000,liabilities decrease by $200,000,and stockholders' equity is unchanged. 
C) Assets decrease by $200,000 and liabilities increase by $200,000. 
D) Assets decrease by $200,000,liabilities are unchanged,and stockholders' equity decreases by $200,000.

Question 17

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

Accepted Answer

A) This is an example of a cash inflow from an investing activity. 
B) The journal entry to record this transaction will include a credit to Cash. 
C) This is an example of a cash outflow from a financing activity. 
D) The journal entry to record this transaction will include a credit to Common Stock. 
A) This is an example of a cash inflow from an investing activity. 
B) The journal entry to record this transaction will include a credit to Cash. 
C) This is an example of a cash outflow from a financing activity. 
D) The journal entry to record this transaction will include a credit to Common Stock.

Question 18

Charlie Co.owes $800,000 to Tilly,Inc.from whom Charlie buys its inventory.Which account would Charlie use to report the amount owed?

Accepted Answer

A) Cash 
B) Accounts Payable 
C) Notes Payable 
D) Accounts Receivable 
A) Cash 
B) Accounts Payable 
C) Notes Payable 
D) Accounts Receivable

Question 19

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 assets to be reported on the balance sheet?

Accepted Answer

A) $750,000 
B) $800,000 
C) $450,000 
D) $400,000 
A) $750,000 
B) $800,000 
C) $450,000 
D) $400,000

Question 20

Match each account name with the category that it would be included under in a classified balance sheet.
-Retained Earnings

Accepted Answer

A) NCA - Noncurrent Asset 
B) CL - Current Liability 
C) SE - Stockholders' Equity 
D) CA - Current Asset 
A) NCA - Noncurrent Asset 
B) CL - Current Liability 
C) SE - Stockholders' Equity 
D) CA - Current Asset

All of the following would be classified as current on a classified balance sheet except:

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

Account titles in the chart of accounts are:

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

A company borrows money from a bank.The journal entry to record the transaction would include a:

At the start of the first year of operations,Retained Earnings would be:

The cost principle is used:

For both accounts and amounts,the standard formatting for a journal entry lists:

Which of the following transactions for Bill's Fish 'n Chips restaurant would be treated as an accounting transaction?

A current asset is one that the company:

What is the ending balance of the Cash account?

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a higher ratio means better ability to pay.

For each of the following,indicate how the event would most likely be categorized. -A company pays cash to an inventor for the legal rights to produce a new product.

Sue Shells,Inc.pays back $200,000 on a loan it had obtained earlier from a bank.

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

Charlie Co.owes $800,000 to Tilly,Inc.from whom Charlie buys its inventory.Which account would Charlie use to report the amount owed?

Match each account name with the category that it would be included under in a classified balance sheet. -Retained Earnings

Business Decisions and Financial Accounting

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 2: The Balance Sheet

All of the following would be classified as current on a classified balance sheet except:

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

Account titles in the chart of accounts are:

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

A company borrows money from a bank.The journal entry to record the transaction would include a:

At the start of the first year of operations,Retained Earnings would be:

The cost principle is used:

For both accounts and amounts,the standard formatting for a journal entry lists:

Which of the following transactions for Bill's Fish 'n Chips restaurant would be treated as an accounting transaction?

A current asset is one that the company:

What is the ending balance of the Cash account?

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a higher ratio means better ability to pay.

For each of the following,indicate how the event would most likely be categorized. -A company pays cash to an inventor for the legal rights to produce a new product.

Sue Shells,Inc.pays back $200,000 on a loan it had obtained earlier from a bank.

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

Charlie Co.owes $800,000 to Tilly,Inc.from whom Charlie buys its inventory.Which account would Charlie use to report the amount owed?

Match each account name with the category that it would be included under in a classified balance sheet. -Retained Earnings

Business Decisions and Financial Accounting

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Long-Lived Tangible and Intangible Assets

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters