Question 1

A company with a high current ratio should never have liquidity problems.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following would cause a decrease in cash from investing activities?

Accepted Answer

A)  Purchasing shares of stock of another company. 
B)  Paying a cash dividend to stockholders. 
C) Issuing additional shares of the company's common stock. 
D) Using cash to purchase supplies. 
A)  Purchasing shares of stock of another company. 
B)  Paying a cash dividend to stockholders. 
C) Issuing additional shares of the company's common stock. 
D) Using cash to purchase supplies. A

Question 3

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Accepted Answer

A) True 
 B)False  True

Question 4

The trial balance is similar to the balance sheet in that it is a listing of assets, liabilities, and stockholders' equity and is provided to external decision makers.

Accepted Answer

A) True 
 B)False

Question 5

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Accepted Answer

A)  A credit to cash for $1,000,000. 
B)  A credit to additional paid-in capital for $1,000,000. 
C) A credit to additional paid-in capital for $50,000. 
D) A credit to common stock for $50,000. 
A)  A credit to cash for $1,000,000. 
B)  A credit to additional paid-in capital for $1,000,000. 
C) A credit to additional paid-in capital for $50,000. 
D) A credit to common stock for $50,000.

Question 6

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000.
The additional paid-in capital account balance increased $2,500 during the year.
The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000.
Net income was $26,000.
How much did Superior sell its common stock for during the year?

Accepted Answer

A)  $5,000. 
B)  $2,500. 
C) $7,500. 
D) $27,500. 
A)  $5,000. 
B)  $2,500. 
C) $7,500. 
D) $27,500.

Question 7

Complete the following schedule for Blue Eye Company.

Accepted Answer

The answer of Complete the following schedule for Blue Eye...

Question 8

The primary objective of financial reporting is to provide useful information to external decision makers.

Accepted Answer

A) True 
 B)False

Question 9

The trial balance is a listing of account balances that are found in the general ledger.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A. Cash
$\quad$Advertising expense
B. Advertising expense 
$\quad$Cash
C. Cash
$\quad$Prepaid advertising expense
D. Prepaid advertising expense 
$\quad$Cash

Accepted Answer

A)  Option A 
B)  Option B 
C) Option C 
D) Option D 
A)  Option A 
B)  Option B 
C) Option C 
D) Option D

Question 11

The Pioneer Company has provided the following account balances: Cash $38,000;
Short-term investments $4,000;
Accounts receivable $48,000;
Supplies $6,000;
Long-term notes receivable $2,000;
Equipment $96,000;
Factory Building $180,000;
Intangible assets $6,000;
Accounts payable $30,000;
Accrued liabilities payable $4,000;
Short-term notes payable $14,000;
Long-term notes payable $92,000;
Common stock $180,000;
Retained earnings $60,000.
What are Pioneer's total current liabilities?

Accepted Answer

A)  $44,000. 
B)  $34,000. 
C) $48,000. 
D) $140,000. 
A)  $44,000. 
B)  $34,000. 
C) $48,000. 
D) $140,000.

Question 12

Which of the following liability accounts does not usually require a future cash payment?

Accepted Answer

A)  Accounts payable. 
B)  Unearned revenues. 
C) Taxes payable. 
D) Notes payable. 
A)  Accounts payable. 
B)  Unearned revenues. 
C) Taxes payable. 
D) Notes payable.

Question 13

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 14

An objective of preparing the trial balance is to test the equality of debits and credits.

Accepted Answer

A) True 
 B)False

Question 15

Selling stock to investors for cash would result in which of the following?

Accepted Answer

A)  A debit to additional paid-in capital and a credit to cash. 
B)  A credit to both cash and additional paid-in capital. 
C) A debit to cash and a credit to common stock. 
D) A debit to cash and a credit to the investment account. 
A)  A debit to additional paid-in capital and a credit to cash. 
B)  A credit to both cash and additional paid-in capital. 
C) A debit to cash and a credit to common stock. 
D) A debit to cash and a credit to the investment account.

Question 16

On January 1, 2014, Dr. Beth Hill started a new professional corporation, Beth Hill, P.C., to practice medicine with an initial investment of $100,000 in exchange for 20,000 shares of $2 par value common stock. On June 30, 2014, the accounting records showed the following amounts: $$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & \$ 2,000 \
\hline \text { Accounts Receivable } & \$ 6,200 \
\hline \text { Cash } & \$ 48,100 \
\hline \text { Common stock } & \$ ? \
\hline \text { Additional paid-in capital } & \$ ? \
\hline \text { Office Equipment } & \$ 60,000 \
\hline \text { Office Supplies } & \$ 3,500 \
\hline \text { Retained Earnings } & \$ 5,800 \
\hline \text { Notes Payable } & \$ 10,000 \
\hline
\end{array}$$ Requirement:
1. Calculate the amounts for common stock and additional paid-in capital.
2. Prepare a balance sheet as of June 30, 2014.

Accepted Answer

The answer of On January 1, 2014, Dr. Beth Hill...

Question 17

For accounting information to be useful, it must be which of the following?

Accepted Answer

A)  It must be consistent and comparable. 
B)  It must be a faithful representation and relevant. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent. 
A)  It must be consistent and comparable. 
B)  It must be a faithful representation and relevant. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent.

Question 18

For each of the transactions listed below, indicate whether it is an investing (I) or financing (F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or decreases (-) cash. $$\begin{array} { | l | l | l | l | } 
\hline  { \text { Transaction } } && \text { Type of Activity } & \text { Effect on Cash } \
\hline \text { Ex. } & \text { Paid dividends to the owners } & \text { F } & - \
\hline \text { A. } & \begin{array} { l } 
\text { Purchased equipment to use in the } \
\text { business. }
\end{array} & & \
\hline \text { B. } & \text { Issued stock for cash. } & & \
\hline \text { C. } & \text { Borrowed money at the bank. } & & \
\hline \text { D. } & \begin{array} { l } 
\text { Sold a piece of land adjacent to the } \
\text { plant. }
\end{array} & & \
\hline \text { E. } & \begin{array} { l } 
\text { Paid the principal balance of a note } \
\text { payable. }
\end{array} & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the transactions listed below,...

Question 19

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Accepted Answer

The investing activities section of the

Question 20

Which of the following would result when a company sells additional shares of common stock for cash?

Accepted Answer

A)  A noncurrent liability and a financing cash flow are created. 
B)  Common stock increases and a financing cash flow results. 
C) A noncurrent liability and an investing cash flow are created. 
D) Common stock increases and an investing cash flow results. 
A)  A noncurrent liability and a financing cash flow are created. 
B)  Common stock increases and a financing cash flow results. 
C) A noncurrent liability and an investing cash flow are created. 
D) Common stock increases and an investing cash flow results.

A company with a high current ratio should never have liquidity problems.

Which of the following would cause a decrease in cash from investing activities?

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

The trial balance is similar to the balance sheet in that it is a listing of assets, liabilities, and stockholders' equity and is provided to external decision makers.

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Complete the following schedule for Blue Eye Company.

The primary objective of financial reporting is to provide useful information to external decision makers.

The trial balance is a listing of account balances that are found in the general ledger.

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A. Cash $\quad$ Advertising expense B. Advertising expense $\quad$ Cash C. Cash $\quad$ Prepaid advertising expense D. Prepaid advertising expense $\quad$ Cash

Which of the following liability accounts does not usually require a future cash payment?

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

An objective of preparing the trial balance is to test the equality of debits and credits.

Selling stock to investors for cash would result in which of the following?

For accounting information to be useful, it must be which of the following?

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Which of the following would result when a company sells additional shares of common stock for cash?

Financial Statements and Business Decisions

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 2: Investing and Financing Decisions and the Accounting System

A company with a high current ratio should never have liquidity problems.

Which of the following would cause a decrease in cash from investing activities?

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

The trial balance is similar to the balance sheet in that it is a listing of assets, liabilities, and stockholders' equity and is provided to external decision makers.

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Complete the following schedule for Blue Eye Company.

The primary objective of financial reporting is to provide useful information to external decision makers.

The trial balance is a listing of account balances that are found in the general ledger.

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A. Cash \quad Advertising expense B. Advertising expense \quad Cash C. Cash \quad Prepaid advertising expense D. Prepaid advertising expense \quad Cash

Which of the following liability accounts does not usually require a future cash payment?

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

An objective of preparing the trial balance is to test the equality of debits and credits.

Selling stock to investors for cash would result in which of the following?

For accounting information to be useful, it must be which of the following?

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Which of the following would result when a company sells additional shares of common stock for cash?

Financial Statements and Business Decisions

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A. Cash $\quad$ Advertising expense B. Advertising expense $\quad$ Cash C. Cash $\quad$ Prepaid advertising expense D. Prepaid advertising expense $\quad$ Cash