Question 1

Your company places an order for inventory with suppliers for delivery in two weeks.

Accepted Answer

A) This is an internal event and it does not affect the balance sheet. 
B) This is an activity that does not affect the balance sheet. 
C) This is an internal event that affects the balance sheet. 
D) This is an external exchange and it affects the balance sheet. 
A) This is an internal event and it does not affect the balance sheet. 
B) This is an activity that does not affect the balance sheet. 
C) This is an internal event that affects the balance sheet. 
D) This is an external exchange and it affects the balance sheet.

Question 2

Which of the following statements about transaction analysis is correct?

Accepted Answer

A) Transactions are analyzed from the standpoint of the owners. 
B) All business activities are considered to be accounting transactions. 
C) The transaction amount is determined for each exchange based on the cost of the items given and received. 
D) A business needs journal entries only to show how transactions affect the balance sheet. 
A) Transactions are analyzed from the standpoint of the owners. 
B) All business activities are considered to be accounting transactions. 
C) The transaction amount is determined for each exchange based on the cost of the items given and received. 
D) A business needs journal entries only to show how transactions affect the balance sheet.

Question 3

A company's trial balance included the following account balances: $\begin{array}{lr}
\text { Accounts Payable } & 19,207 \
\text { Accounts Receivable } & 81,336 \
\text { Cash } & 73,324 \
\text { Income Tax Payable } & 3,512 \
\text { Inventory } & 25,816 \
\text { Note Payable, due in two years } & 1,709 \
\text { Equipment } & 54,128 \
\text { Stockholders'Equity } & 202,808 \
\text { Supplies } & 5,512 \
\text { Wages Payable } & 12,880
\end{array}$ What is the amount of Total Liabilities on the Balance Sheet?

Accepted Answer

A) $240,116 
B) $37,308 
C) $35,599 
D) $20,916 
A) $240,116 
B) $37,308 
C) $35,599 
D) $20,916

Question 4

The acquisition of inventory in an exchange for a company's stock would increase the current ratio of the company.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an asset?

Accepted Answer

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

Question 6

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

Accepted Answer

A) All asset accounts have a normal debit balance with the exception of cash,which has a normal credit balance. 
B) The Common Stock account is increased by debits. 
C) When payment is made on a liability such as accounts payable,the liability account is decreased with a debit. 
D) The total amount of asset accounts must equal the total amount of liability accounts minus the total amount of stockholders' equity accounts. 
A) All asset accounts have a normal debit balance with the exception of cash,which has a normal credit balance. 
B) The Common Stock account is increased by debits. 
C) When payment is made on a liability such as accounts payable,the liability account is decreased with a debit. 
D) The total amount of asset accounts must equal the total amount of liability accounts minus the total amount of stockholders' equity accounts.

Question 7

A ________ is a list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named.

Accepted Answer

A) chart of accounts 
B) trial balance 
C) classified balance sheet 
D) ledger 
A) chart of accounts 
B) trial balance 
C) classified balance sheet 
D) ledger

Question 8

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

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 9

The Smith Corp.began business this year and entered into the following transactions during the year.The company issued common stock in exchange for cash of $80,000 from stockholders,borrowed $40,000 from a bank,bought $12,000 of inventory on account,and purchased $32,000 of equipment by paying $12,000 in cash and issuing a note for the remainder.What is the amount of total assets to be reported on the balance sheet at the end of the year?

Accepted Answer

A) $104,000 
B) $120,000 
C) $128,000 
D) $152,000 
A) $104,000 
B) $120,000 
C) $128,000 
D) $152,000

Question 10

A difference between debt financing and equity financing is that:

Accepted Answer

A) debt financing must be repaid,while repayment of equity financing is not required. 
B) equity financing must be repaid,while repayment of debt financing is not required. 
C) only debt financing can be used to purchase assets. 
D) only equity financing can be used to purchase assets. 
A) debt financing must be repaid,while repayment of equity financing is not required. 
B) equity financing must be repaid,while repayment of debt financing is not required. 
C) only debt financing can be used to purchase assets. 
D) only equity financing can be used to purchase assets.

Question 11

A company's trial balance included the following account balances: $\begin{array}{lr}
\text { Accounts Payable } & 19,207 \
\text { Accounts Receivable } & 81,336 \
\text { Cash } & 73,324 \
\text { Income Tax Payable } & 3,512 \
\text { Inventory } & 25,816 \
\text { Note Payable, due in two years } & 1,709 \
\text { Equipment } & 54,128 \
\text { Stockholders'Equity } & 202,808 \
\text { Supplies } & 5,512 \
\text { Wages Payable } & 12,880
\end{array}$ What is the amount of Total Assets on the Balance Sheet?

Accepted Answer

A) $240,116 
B) $214,300 
C) $442,924 
D) $480,232 
A) $240,116 
B) $214,300 
C) $442,924 
D) $480,232

Question 12

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Accepted Answer

A) $100,000 debit to Notes Payable and a $100,000 credit to Cash. 
B) $100,000 credit to Cash and a $100,000 credit to Notes Payable. 
C) $100,000 debit to Cash and a $100,000 credit to Notes Payable. 
D) $100,000 debit to Cash and a $100,000 debit to Notes Payable. 
A) $100,000 debit to Notes Payable and a $100,000 credit to Cash. 
B) $100,000 credit to Cash and a $100,000 credit to Notes Payable. 
C) $100,000 debit to Cash and a $100,000 credit to Notes Payable. 
D) $100,000 debit to Cash and a $100,000 debit to Notes Payable.

Question 13

Listed below are components of several transactions.Indicate whether a debit (dr)or credit (cr)would be required to record the component of the transaction.
-Increase in Accounts Payable.

Accepted Answer

A) cr 
B) dr 
A) cr 
B) dr

Question 14

Grizzly Co.enters into the following transactions:
Stockholders contribute $25,000 cash to a company in exchange for common stock.
The company purchases $12,500 of new equipment in exchange for its promise to pay $12,500 at the end of next month.
The company pays $7,500 to suppliers on account.
Required:
Part a.Show the effect of these transactions on the basic accounting equation.
Part b.Prepare the journal entries that would be used to record the transactions.

Accepted Answer

Part a.
 @#IMG-DLM&

Question 15

Journal entries show the effects of transactions on the elements of the accounting equation,as well as the account balances.

Accepted Answer

A) True 
 B)False

Question 16

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

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 17

A business can obtain financing by issuing stock or borrowing from third parties,such as banks.What are the balance sheet effects of issuing stock to obtain cash?

Accepted Answer

A) No effect on assets;Decrease liabilities;Increase stockholders' equity 
B) Increase assets;Increase liabilities;Increase stockholders' equity 
C) Increase assets;No effect on liabilities;Increase stockholders' equity 
D) Increase assets;Increase liabilities;No effect on stockholders' equity 
A) No effect on assets;Decrease liabilities;Increase stockholders' equity 
B) Increase assets;Increase liabilities;Increase stockholders' equity 
C) Increase assets;No effect on liabilities;Increase stockholders' equity 
D) Increase assets;Increase liabilities;No effect on stockholders' equity

Question 18

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

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 19

A company's trial balance included the following account balances: $\begin{array}{lr}
\text { Accounts Payable } & 19,207 \
\text { Accounts Receivable } & 81,336 \
\text { Cash } & 73,324 \
\text { Income Tax Payable } & 3,512 \
\text { Inventory } & 25,816 \
\text { Note Payable, due in two years } & 1,709 \
\text { Equipment } & 54,128 \
\text { Stockholders'Equity } & 202,808 \
\text { Supplies } & 5,512 \
\text { Wages Payable } & 12,880
\end{array}$ What is the amount of the current ratio? (Round your answer to 2 decimal places. )

Accepted Answer

A) 8.05 
B) 6.44 
C) 5.22 
D) 1.00 
A) 8.05 
B) 6.44 
C) 5.22 
D) 1.00

Question 20

A company receives $100,000 cash from investors in exchange for stock.Several weeks later,the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder.The accounts involved in these two transactions are:

Accepted Answer

A) Cash;Equipment;Noncurrent Investments;and Accounts Payable. 
B) Cash;Noncurrent Investments;Common Stock;and Notes Payable. 
C) Cash;Equipment;Common Stock;and Notes Payable. 
D) Equipment;Notes Payable;and Retained Earnings. 
A) Cash;Equipment;Noncurrent Investments;and Accounts Payable. 
B) Cash;Noncurrent Investments;Common Stock;and Notes Payable. 
C) Cash;Equipment;Common Stock;and Notes Payable. 
D) Equipment;Notes Payable;and Retained Earnings.

Your company places an order for inventory with suppliers for delivery in two weeks.

Which of the following statements about transaction analysis is correct?

The acquisition of inventory in an exchange for a company's stock would increase the current ratio of the company.

Which of the following is an asset?

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

A ________ is a list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named.

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

A difference between debt financing and equity financing is that:

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Listed below are components of several transactions.Indicate whether a debit (dr)or credit (cr)would be required to record the component of the transaction. -Increase in Accounts Payable.

Journal entries show the effects of transactions on the elements of the accounting equation,as well as the account balances.

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

A business can obtain financing by issuing stock or borrowing from third parties,such as banks.What are the balance sheet effects of issuing stock to obtain cash?

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

A company receives $100,000 cash from investors in exchange for stock.Several weeks later,the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder.The accounts involved in these two transactions are:

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

Your company places an order for inventory with suppliers for delivery in two weeks.

Which of the following statements about transaction analysis is correct?

The acquisition of inventory in an exchange for a company's stock would increase the current ratio of the company.

Which of the following is an asset?

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

A ________ is a list of account titles with corresponding reference numbers used by companies so that transaction items are consistently named.

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

A difference between debt financing and equity financing is that:

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Listed below are components of several transactions.Indicate whether a debit (dr)or credit (cr)would be required to record the component of the transaction. -Increase in Accounts Payable.

Journal entries show the effects of transactions on the elements of the accounting equation,as well as the account balances.

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

A business can obtain financing by issuing stock or borrowing from third parties,such as banks.What are the balance sheet effects of issuing stock to obtain cash?

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

A company receives $100,000 cash from investors in exchange for stock.Several weeks later,the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder.The accounts involved in these two transactions are:

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