Question 1

Which of the following journal entries is correct when a business entity uses cash to pay an account payable?

Accepted Answer

A)  Accounts Payable
 $ \quad $ $ \quad $Cash 
B)  Retained Earnings
 $ \quad $ $ \quad $Cash 
C)  Cash
 $ \quad $Accounts Payable 
D)  Cash
 $ \quad $Notes Payable 
A)  Accounts Payable
 $ \quad $ $ \quad $Cash 
B)  Retained Earnings
 $ \quad $ $ \quad $Cash 
C)  Cash
 $ \quad $Accounts Payable 
D)  Cash
 $ \quad $Notes Payable

Question 2

A business transaction consists of an exchange of assets or services for assets,services,or promises to pay between a business and an external party to the business.

Accepted Answer

A) True 
 B)False

Question 3

The Lake Company has provided the following account balances:
Cash $76,000;
Short-term investments $8,000;
Accounts receivable $12,000;
Inventory $96,000;
Long-term notes receivable $4,000;
Equipment $192,000;
Factory Building $360,000;
Intangible assets $12,000;
Accounts payable $90,000;
Accrued liabilities payable $12,000;
Short-term notes payable $42,000;
Long-term notes payable $184,000.
Requirement:
What is Lake's current ratio?

Accepted Answer

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

Question 4

Current assets include accounts receivable and prepaid expenses.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would result when a company lends cash to a franchisee in exchange for a ten-month note receivable?

Accepted Answer

A) A noncurrent asset and an investing cash flow are created. 
B) A noncurrent asset and a financing cash flow are created. 
C) A current asset and a financing cash flow are created. 
D) A current asset and an investing cash flow are created. 
A) A noncurrent asset and an investing cash flow are created. 
B) A noncurrent asset and a financing cash flow are created. 
C) A current asset and a financing cash flow are created. 
D) A current asset and an investing cash flow are created.

Question 6

Which of the following describes the impact on the balance sheet when a company uses cash to purchase the stock of another company?

Accepted Answer

A) Total assets increase. 
B) Stockholders' equity increases. 
C) Stockholders' equity decreases. 
D) Total assets remain the same. 
A) Total assets increase. 
B) Stockholders' equity increases. 
C) Stockholders' equity decreases. 
D) Total assets remain the same.

Question 7

Assets are reported on the balance sheet in the order of their liquidity.

Accepted Answer

A) True 
 B)False

Question 8

In what order would the following assets be listed on a balance sheet?

Accepted Answer

A) Cash, Accounts Receivable, Inventory, Plant and Equipment. 
B) Cash, Intangible Assets, Accounts Receivable, Plant and Equipment. 
C) Cash, Accounts Receivable, Plant and Equipment, Inventory. 
D) Cash, Inventory, Intangible Assets, Accounts Receivable. 
A) Cash, Accounts Receivable, Inventory, Plant and Equipment. 
B) Cash, Intangible Assets, Accounts Receivable, Plant and Equipment. 
C) Cash, Accounts Receivable, Plant and Equipment, Inventory. 
D) Cash, Inventory, Intangible Assets, Accounts Receivable.

Question 9

A company purchases a delivery van by paying $5,000 cash and by signing a $25,000 note payable.Which of the following correctly describes the recording of the delivery van purchase?

Accepted Answer

A) The delivery van account is debited for $25,000. 
B) Notes payable is debited for $25,000. 
C) The delivery van account is debited for $30,000. 
D) Cash is debited for $5,000. 
A) The delivery van account is debited for $25,000. 
B) Notes payable is debited for $25,000. 
C) The delivery van account is debited for $30,000. 
D) Cash is debited for $5,000.

Question 10

Unearned revenue is reported on the balance sheet as a liability and represents amounts paid to an entity for which the entity has an obligation to provide future services and/or goods.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following transactions will cause both the left and right side of the accounting equation to decrease?

Accepted Answer

A) Collecting cash from a customer who owed us money. 
B) Paying a supplier for inventory we previously purchased on account. 
C) Borrowing money from a bank. 
D) Purchasing equipment using cash. 
A) Collecting cash from a customer who owed us money. 
B) Paying a supplier for inventory we previously purchased on account. 
C) Borrowing money from a bank. 
D) Purchasing equipment using cash.

Question 12

Which of the following direct effects on the accounting equation isn't possible as a result of a single business transaction which impacts only two accounts?

Accepted Answer

A) An increase in a liability and a decrease in an asset. 
B) An increase in stockholders' equity and an increase in an asset. 
C) An increase in an asset and a decrease in an asset. 
D) A decrease in stockholders' equity and a decrease in an asset. 
A) An increase in a liability and a decrease in an asset. 
B) An increase in stockholders' equity and an increase in an asset. 
C) An increase in an asset and a decrease in an asset. 
D) A decrease in stockholders' equity and a decrease in an asset.

Question 13

Chad Jones is the sole owner and manager of Jones Glass Repair Shop.Jones purchased a truck for $30,000 to be used in the business.Which of the following fundamentals requires Jones to record the truck at the price paid to buy it?

Accepted Answer

A) Separate-entity assumption 
B) Revenue principle 
C) Unit-of-measure assumption 
D) Historical cost principle 
A) Separate-entity assumption 
B) Revenue principle 
C) Unit-of-measure assumption 
D) Historical cost principle

Question 14

Which of the following journal entries is correct when a business entity purchases a building by paying cash and signing a note payable?

Accepted Answer

A)  Building
 $ \quad $Cash
 $ \quad $Notes Payable 
B)  Building
 $ \quad $Cash 
C)  Cash
Notes Payable
 $ \quad $ $ \quad $Building 
D)  Building
Cash
 $ \quad $Notes Payable 
A)  Building
 $ \quad $Cash
 $ \quad $Notes Payable 
B)  Building
 $ \quad $Cash 
C)  Cash
Notes Payable
 $ \quad $ $ \quad $Building 
D)  Building
Cash
 $ \quad $Notes Payable

Question 15

In order for information to be relevant the information should have both predictive and

Accepted Answer

A) True 
 B)False

Question 16

The normal balance for an asset account is a debit and the normal balance for a liability account is a credit.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following account balances would not be included in the calculation of the current ratio?

Accepted Answer

A) Accounts receivable 
B) Short-term notes payable 
C) Contributed capital 
D) Inventory 
A) Accounts receivable 
B) Short-term notes payable 
C) Contributed capital 
D) Inventory

Question 18

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

Accepted Answer

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

Question 19

Which of the following happens when equipment is purchased using cash?

Accepted Answer

A) Total assets decrease. 
B) Current assets don't change. 
C) Current assets increase. 
D) Stockholders' equity doesn't change. 
A) Total assets decrease. 
B) Current assets don't change. 
C) Current assets increase. 
D) Stockholders' equity doesn't change.

Question 20

The dual effects concept implies that every transaction has at least two effects on the accounting equation.

Accepted Answer

A) True 
 B)False

Which of the following journal entries is correct when a business entity uses cash to pay an account payable?

A business transaction consists of an exchange of assets or services for assets,services,or promises to pay between a business and an external party to the business.

Current assets include accounts receivable and prepaid expenses.

Which of the following would result when a company lends cash to a franchisee in exchange for a ten-month note receivable?

Which of the following describes the impact on the balance sheet when a company uses cash to purchase the stock of another company?

Assets are reported on the balance sheet in the order of their liquidity.

In what order would the following assets be listed on a balance sheet?

A company purchases a delivery van by paying $5,000 cash and by signing a $25,000 note payable.Which of the following correctly describes the recording of the delivery van purchase?

Unearned revenue is reported on the balance sheet as a liability and represents amounts paid to an entity for which the entity has an obligation to provide future services and/or goods.

Which of the following transactions will cause both the left and right side of the accounting equation to decrease?

Which of the following direct effects on the accounting equation isn't possible as a result of a single business transaction which impacts only two accounts?

Chad Jones is the sole owner and manager of Jones Glass Repair Shop.Jones purchased a truck for $30,000 to be used in the business.Which of the following fundamentals requires Jones to record the truck at the price paid to buy it?

Which of the following journal entries is correct when a business entity purchases a building by paying cash and signing a note payable?

In order for information to be relevant the information should have both predictive and

The normal balance for an asset account is a debit and the normal balance for a liability account is a credit.

Which of the following account balances would not be included in the calculation of the current ratio?

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

Which of the following happens when equipment is purchased using cash?

The dual effects concept implies that every transaction has at least two effects on the accounting equation.

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 journal entries is correct when a business entity uses cash to pay an account payable?

A business transaction consists of an exchange of assets or services for assets,services,or promises to pay between a business and an external party to the business.

Current assets include accounts receivable and prepaid expenses.

Which of the following would result when a company lends cash to a franchisee in exchange for a ten-month note receivable?

Which of the following describes the impact on the balance sheet when a company uses cash to purchase the stock of another company?

Assets are reported on the balance sheet in the order of their liquidity.

In what order would the following assets be listed on a balance sheet?

A company purchases a delivery van by paying $5,000 cash and by signing a $25,000 note payable.Which of the following correctly describes the recording of the delivery van purchase?

Unearned revenue is reported on the balance sheet as a liability and represents amounts paid to an entity for which the entity has an obligation to provide future services and/or goods.

Which of the following transactions will cause both the left and right side of the accounting equation to decrease?

Which of the following direct effects on the accounting equation isn't possible as a result of a single business transaction which impacts only two accounts?

Chad Jones is the sole owner and manager of Jones Glass Repair Shop.Jones purchased a truck for $30,000 to be used in the business.Which of the following fundamentals requires Jones to record the truck at the price paid to buy it?

Which of the following journal entries is correct when a business entity purchases a building by paying cash and signing a note payable?

In order for information to be relevant the information should have both predictive and

The normal balance for an asset account is a debit and the normal balance for a liability account is a credit.

Which of the following account balances would not be included in the calculation of the current ratio?

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

Which of the following happens when equipment is purchased using cash?

The dual effects concept implies that every transaction has at least two effects on the accounting equation.

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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