Question 1

Consider the following journal entry: $$\begin{array} { c r r } 
\text { Software } & 18,000 & \
\quad \text { Cash } & & 7,200 \
\text { Note Payable } & & 10,800
\end{array}$$ Which of the following explanations best describes this journal entry?

Accepted Answer

A) The company buys $18,000 of software,pays cash of $7,200,and signs a note for $10,800. 
B) The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software. 
C) The company buys $18,000 of software,pays $7,200 cash,and promises to cancel a debt owed to the company in the amount of $10,800. 
D) The company sells $18,000 of software,receives $7,200 in cash,and pays off $10,800 it owes on the software. 
A) The company buys $18,000 of software,pays cash of $7,200,and signs a note for $10,800. 
B) The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software. 
C) The company buys $18,000 of software,pays $7,200 cash,and promises to cancel a debt owed to the company in the amount of $10,800. 
D) The company sells $18,000 of software,receives $7,200 in cash,and pays off $10,800 it owes on the software.

Question 2

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. 
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.

Question 3

Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Accepted Answer

A) increase total assets. 
B) decrease total liabilities. 
C) decrease Common Stock. 
D) increase total assets and decrease total liabilities. 
A) increase total assets. 
B) decrease total liabilities. 
C) decrease Common Stock. 
D) increase total assets and decrease total liabilities.

Question 4

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 amount of current assets on the classified balance sheet?

Accepted Answer

A) $170,310 
B) $96,060 
C) $49,260 
D) $123,255 
A) $170,310 
B) $96,060 
C) $49,260 
D) $123,255

Question 5

Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts:   What is the balance of the credit column on Broadway's trial balance?

Accepted Answer

A) $241,200 
B) $120,600 
C) $90,600 
D) $90,000 
A) $241,200 
B) $120,600 
C) $90,600 
D) $90,000

Question 6

The Accounts Payable account:

Accepted Answer

A) has a normal credit balance. 
B) is increased by a debit. 
C) is an asset. 
D) is increased when a company receives cash from customers. 
A) has a normal credit balance. 
B) is increased by a debit. 
C) is an asset. 
D) is increased when a company receives cash from customers.

Question 7

Which account would be decreased with a credit?

Accepted Answer

A) Retained Earnings 
B) Accounts Receivable 
C) Common Stock 
D) Notes Payable 
A) Retained Earnings 
B) Accounts Receivable 
C) Common Stock 
D) Notes Payable

Question 8

If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

Accepted Answer

A) True 
 B)False

Question 9

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

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

Question 10

Within the debit/credit framework,the best interpretation of the word "credit" is:

Accepted Answer

A) left side of an account. 
B) increase side of an account. 
C) right side of an account. 
D) decrease side of an account. 
A) left side of an account. 
B) increase side of an account. 
C) right side of an account. 
D) decrease side of an account.

Question 11

When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Accepted Answer

A) The asset is debited for the amount paid plus the amount owed. 
B) The asset is debited for the amount paid.The amount owed will be debited to the asset once paid. 
C) The asset is credited for the amount paid plus the amount owed. 
D) The asset is credited for the amount paid.The amount owed will be debited to the asset once paid. 
A) The asset is debited for the amount paid plus the amount owed. 
B) The asset is debited for the amount paid.The amount owed will be debited to the asset once paid. 
C) The asset is credited for the amount paid plus the amount owed. 
D) The asset is credited for the amount paid.The amount owed will be debited to the asset once paid.

Question 12

Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

Accepted Answer

A) Accounts Receivable 
B) Notes Payable 
C) Salaries Expense 
D) Accounts Payable 
A) Accounts Receivable 
B) Notes Payable 
C) Salaries Expense 
D) Accounts Payable

Question 13

Park & Company was recently formed with a $25,000 investment in the company by stockholders in exchange for common stock.The company then borrowed $10,000 from a local bank,purchased $5,000 of supplies on account,and also purchased $25,000 of equipment by paying $10,000 in cash and signing a promissory note for the balance.Based on these transactions,the company's total assets are:

Accepted Answer

A) $35,000. 
B) $45,000. 
C) $50,000. 
D) $55,000. 
A) $35,000. 
B) $45,000. 
C) $50,000. 
D) $55,000.

Question 14

For each of the following,indicate how the event would most likely be categorized.
-A company receives $1 million in orders but no down payments.

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

Debt financing is financing obtained from:

Accepted Answer

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

Question 16

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

Question 17

You are pleasantly surprised to discover that a popular actress appears on The Tonight Show wearing your company's jeans.Later,your company's sales increase by $500,000 as a result.When the actress appeared on TV,you would have recorded an asset because the TV appearance was expected to bring future economic benefits to your company.

Accepted Answer

A) True 
 B)False

Question 18

During its first year of operations,a company entered into the following transactions: Borrowed $20,000 from the bank by signing a promissory note.
Issued stock to owners for $40,000.
Purchased $4,000 of supplies on account.
Paid $1,600 to suppliers as payment on account for the supplies purchased.
What is the amount of total liabilities at the end of the year?

Accepted Answer

A) $24,000 
B) $62,400 
C) $64,000 
D) $22,400 
A) $24,000 
B) $62,400 
C) $64,000 
D) $22,400

Question 19

Assets are listed on a classified balance sheet:

Accepted Answer

A) in alphabetical order. 
B) from the largest dollar amount to the lowest dollar amount. 
C) beginning with noncurrent assets and ending with current assets. 
D) beginning with current assets and starting with Cash. 
A) in alphabetical order. 
B) from the largest dollar amount to the lowest dollar amount. 
C) beginning with noncurrent assets and ending with current assets. 
D) beginning with current assets and starting with Cash.

Question 20

Which of the following is an accounting transaction?

Accepted Answer

A) A manager hires an employee. 
B) A manager orders supplies. 
C) A manager signs a promissory note and receives cash. 
D) A manager agrees to deliver their product in three weeks. 
A) A manager hires an employee. 
B) A manager orders supplies. 
C) A manager signs a promissory note and receives cash. 
D) A manager agrees to deliver their product in three weeks.

Consider the following journal entry: Software 18,000 Cash 7,200 Note Payable 10,800 Which of the following explanations best describes this journal entry?

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

Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts: What is the balance of the credit column on Broadway's trial balance?

The Accounts Payable account:

Which account would be decreased with a credit?

If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

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

Within the debit/credit framework,the best interpretation of the word "credit" is:

When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

For each of the following,indicate how the event would most likely be categorized. -A company receives $1 million in orders but no down payments.

Debt financing is financing obtained from:

Which of the following requires a credit?

Assets are listed on a classified balance sheet:

Which of the following is an accounting transaction?

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

Consider the following journal entry: Software 18,000 Cash 7,200 Note Payable 10,800 Which of the following explanations best describes this journal entry?

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

Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts: What is the balance of the credit column on Broadway's trial balance?

The Accounts Payable account:

Which account would be decreased with a credit?

If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

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

Within the debit/credit framework,the best interpretation of the word "credit" is:

When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

For each of the following,indicate how the event would most likely be categorized. -A company receives $1 million in orders but no down payments.

Debt financing is financing obtained from:

Which of the following requires a credit?

Assets are listed on a classified balance sheet:

Which of the following is an accounting transaction?

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