Question 1

Which of the following statements is false?

Accepted Answer

A) An item considered immaterial can be accounted for in the most cost-beneficial manner. 
B) An item is considered relevant if it has the ability to influence a decision. 
C) Information is considered to be reliable when it is accurate, unbiased, and verifiable. 
D) Conservatism suggests that assets and revenues should be overstated when possible. 
A) An item considered immaterial can be accounted for in the most cost-beneficial manner. 
B) An item is considered relevant if it has the ability to influence a decision. 
C) Information is considered to be reliable when it is accurate, unbiased, and verifiable. 
D) Conservatism suggests that assets and revenues should be overstated when possible.

Question 2

The Superior Company has provided the following account balances:
Cash $152,000;
Short-term investments $18,000;
Accounts receivable $36,000;
Inventory $116,000;
Long-term notes receivable $44,000;
Equipment $174,000;
Factory Building $270,000;
Intangible assets $33,000;
Accounts payable $130,000;
Accrued liabilities payable $19,000;
Short-term notes payable $84,000;
Long-term notes payable $169,000.
Requirement:
What is Superior's stockholders' equity?

Accepted Answer

The answer of The Superior Company has provided the following...

Question 3

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

Accepted Answer

A) A debit to contributed capital and a credit to cash. 
B) A credit to both cash and contributed capital. 
C) A debit to cash and a credit to contributed capital. 
D) A debit to cash and a credit to retained earnings. 
A) A debit to contributed capital and a credit to cash. 
B) A credit to both cash and contributed capital. 
C) A debit to cash and a credit to contributed capital. 
D) A debit to cash and a credit to retained earnings.

Question 4

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

Accepted Answer

The answer of Describe both the investing activities and financing...

Question 5

The current ratio is current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

The duality (or duality of effects)concept states that

Accepted Answer

A) both the income statement and balance sheet are impacted by every transaction. 
B) every transaction has an impact on assets and stockholders' equity. 
C) there are two entities involved in every transaction. 
D) every transaction has at least two effects on the accounting equation. 
A) both the income statement and balance sheet are impacted by every transaction. 
B) every transaction has an impact on assets and stockholders' equity. 
C) there are two entities involved in every transaction. 
D) every transaction has at least two effects on the accounting equation.

Question 7

Purchasing stock of another company for cash doesn't result in an increase in total assets for the purchasing company.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following best describes assets?

Accepted Answer

A) Resources with possible future economic benefits owed by an entity as a result of past transactions. 
B) Resources with probable future economic benefits owned by an entity as a result of past transactions. 
C) Resources with probable future economic benefits owned by an entity as a result of future transactions. 
D) Resources with possible future economic benefits owed by an entity as a result of future transactions. 
A) Resources with possible future economic benefits owed by an entity as a result of past transactions. 
B) Resources with probable future economic benefits owned by an entity as a result of past transactions. 
C) Resources with probable future economic benefits owned by an entity as a result of future transactions. 
D) Resources with possible future economic benefits owed by an entity as a result of future transactions.

Question 9

When a company buys equipment for $150,000 and pays for one third in cash and the other two thirds is financed by a note payable,which of the following are the effects on the accounting equation?

Accepted Answer

A) Total assets decrease $50,000. 
B) Total liabilities increase $150,000. 
C) Total liabilities decrease $50,000. 
D) Total assets increase $100,000. 
A) Total assets decrease $50,000. 
B) Total liabilities increase $150,000. 
C) Total liabilities decrease $50,000. 
D) Total assets increase $100,000.

Question 10

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Accepted Answer

A) True 
 B)False

Question 11

Issuing stock in exchange for cash creates a financing activity cash flow.

Accepted Answer

A) True 
 B)False

Question 12

An account payable would be reported within which of the following financial statements?

Accepted Answer

A) Statement of cash flows 
B) Income statement 
C) Balance sheet 
D) Statement of retained earnings 
A) Statement of cash flows 
B) Income statement 
C) Balance sheet 
D) Statement of retained earnings

Question 13

The ABC Corporation was formed on January 1,2010.The three initial owners invested $100,000 cash and received shares of stock.Below are selected transactions that were completed during January,2010.
1.Sold stock to the owners.
2.Borrowed $80,000 on a one-year note payable.
3.Purchased land by signing a $70,000 note payable.
4.Paid $10,000 of accounts payable.
5.Purchased two service vehicles for cash at a cost of $24,000 each.
6.Purchased $2,000 of supplies on credit.
Prepare the journal entry on ABC's books for each transaction.

Accepted Answer

The answer of The ABC Corporation was formed on January...

Question 14

Which of the following best describes liabilities?

Accepted Answer

A) Possible debts or obligations of an entity as a result of future transactions which will be paid with assets or services. 
B) Possible debts or obligations of an entity as a result of past transactions which will be paid with assets or services. 
C) Probable debts or obligations of an entity as a result of future transactions which will be paid with assets or services. 
D) Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services. 
A) Possible debts or obligations of an entity as a result of future transactions which will be paid with assets or services. 
B) Possible debts or obligations of an entity as a result of past transactions which will be paid with assets or services. 
C) Probable debts or obligations of an entity as a result of future transactions which will be paid with assets or services. 
D) Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services.

Question 15

Which of the following is included within current assets on a balance sheet?

Accepted Answer

A) Land used in daily operations. 
B) A truck used in daily operations. 
C) Inventory which takes two years to manufacture. 
D) Intangible assets. 
A) Land used in daily operations. 
B) A truck used in daily operations. 
C) Inventory which takes two years to manufacture. 
D) Intangible assets.

Question 16

A journal entry is an expression of the effects of a transaction on accounts which has equal debits and credits.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following journal entries is correct when a business entity builds an addition to the factory building by paying cash to a contractor?

Accepted Answer

A)  Retained Earnings
 $ \quad $Cash 
B)  Building
 $ \quad $ $ \quad $Contributed Capital 
C)  Cash
 $ \quad $Building 
D)  Building
 $ \quad $Cash 
A)  Retained Earnings
 $ \quad $Cash 
B)  Building
 $ \quad $ $ \quad $Contributed Capital 
C)  Cash
 $ \quad $Building 
D)  Building
 $ \quad $Cash

Question 18

At the beginning of April,Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000.During April the following summarized transactions occurred:
Additional shares of stock were sold for $20,000 cash.
A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable.
Short-term investments costing $9,000 were purchased using cash.
$10,000 was lent to an employee; the employee signed a six-month note in exchange for the loan.
How much are Warren's total liabilities at the end of April?

Accepted Answer

A) $145,000 
B) $155,000 
C) $165,000 
D) $135,000 
A) $145,000 
B) $155,000 
C) $165,000 
D) $135,000

Question 19

Why is the historical cost principle so important for balance sheet reporting?

Accepted Answer

The answer of Why is the historical cost principle so...

Question 20

A corporation purchased factory equipment using cash.Which of the following statements regarding this purchase is false?

Accepted Answer

A) The current year's net income for will be reduced by the cost of the factory equipment. 
B) The total assets will not change. 
C) The total liabilities will not change. 
D) The current stockholders' equity will not change. 
A) The current year's net income for will be reduced by the cost of the factory equipment. 
B) The total assets will not change. 
C) The total liabilities will not change. 
D) The current stockholders' equity will not change.

Which of the following statements is false?

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

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

The current ratio is current assets divided by current liabilities.

The duality (or duality of effects)concept states that

Purchasing stock of another company for cash doesn't result in an increase in total assets for the purchasing company.

Which of the following best describes assets?

When a company buys equipment for $150,000 and pays for one third in cash and the other two thirds is financed by a note payable,which of the following are the effects on the accounting equation?

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Issuing stock in exchange for cash creates a financing activity cash flow.

An account payable would be reported within which of the following financial statements?

Which of the following best describes liabilities?

Which of the following is included within current assets on a balance sheet?

A journal entry is an expression of the effects of a transaction on accounts which has equal debits and credits.

Which of the following journal entries is correct when a business entity builds an addition to the factory building by paying cash to a contractor?

Why is the historical cost principle so important for balance sheet reporting?

A corporation purchased factory equipment using cash.Which of the following statements regarding this purchase is false?

Financial Statements and Business Decisions

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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Exam 2: Investing and Financing Decisions and the Balance Sheet

Which of the following statements is false?

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

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

The current ratio is current assets divided by current liabilities.

The duality (or duality of effects)concept states that

Purchasing stock of another company for cash doesn't result in an increase in total assets for the purchasing company.

Which of the following best describes assets?

When a company buys equipment for $150,000 and pays for one third in cash and the other two thirds is financed by a note payable,which of the following are the effects on the accounting equation?

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Issuing stock in exchange for cash creates a financing activity cash flow.

An account payable would be reported within which of the following financial statements?

Which of the following best describes liabilities?

Which of the following is included within current assets on a balance sheet?

A journal entry is an expression of the effects of a transaction on accounts which has equal debits and credits.

Which of the following journal entries is correct when a business entity builds an addition to the factory building by paying cash to a contractor?

Why is the historical cost principle so important for balance sheet reporting?

A corporation purchased factory equipment using cash.Which of the following statements regarding this purchase is false?

Financial Statements and Business Decisions

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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