Question 1

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;ledger 
A) ledger;journal 
B) journal;ledger 
C) trial balance;journal 
D) trial balance;ledger

Question 2

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

Question 3

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) $400,000 
A) $300,000 
B) $0 
C) $450,000 
D) $400,000

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. 
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.

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

Question 6

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

Accepted Answer

A) $166,560 
B) $156,135 
C) $170,310 
D) $162,885 
A) $166,560 
B) $156,135 
C) $170,310 
D) $162,885

Question 7

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. 
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.

Question 8

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 9

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 10

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

Question 11

Equity financing is financing obtained from:

Accepted Answer

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

Question 12

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. 
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.

Question 13

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

Question 14

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. 
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.

Question 15

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. 
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.

Question 16

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. 
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 17

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

Question 18

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. 
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.

Question 19

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. 
A) conservatism exception. 
B) separate entity assumption. 
C) cost principle. 
D) monetary unit assumption.

Question 20

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. 
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.

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.

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.

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?

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

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

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

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:

Equity financing is financing obtained from:

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

If land is purchased for cash:

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

Which of the following statements about liabilities is not correct?

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

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?

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?

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

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

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

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.

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.

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?

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

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

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

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:

Equity financing is financing obtained from:

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

If land is purchased for cash:

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

Which of the following statements about liabilities is not correct?

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

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?

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?

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

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

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

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.