Question 1

The characteristic shared by all liabilities is that they:

Accepted Answer

A)  provide a future economic benefit. 
B)  result in an inflow of resources to the company. 
C)  always end in the word "payable." 
D)  obligate the company to do something in the future. 
A)  provide a future economic benefit. 
B)  result in an inflow of resources to the company. 
C)  always end in the word "payable." 
D)  obligate the company to do something in the future.

Question 2

Consider the following journal entry:
 
Which of the following explanations best describes this journal entry?

Accepted Answer

A)  The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000. 
B)  The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment. 
C)  The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000. 
D)  The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment. 
A)  The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000. 
B)  The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment. 
C)  The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000. 
D)  The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.

Question 3

Which account is affected by recording the buying of goods on credit?

Accepted Answer

A)  Cash 
B)  Retained Earnings 
C)  Common Stock 
D)  Accounts Payable 
A)  Cash 
B)  Retained Earnings 
C)  Common Stock 
D)  Accounts Payable

Question 4

If a company receives $20,000 cash from its customers on account and uses the cash to pay $20,000 to its suppliers on accounts,the net result is that:

Accepted Answer

A)  assets would increase by $20,000 while liabilities would decrease by $20,000. 
B)  liabilities would decrease by $20,000 while stockholders' equity would increase by $20,000. 
C)  assets would decrease by $20,000 and liabilities would decrease by $20,000. 
D)  liabilities would decrease by $20,000 and stockholders' equity would decrease by $20,000. 
A)  assets would increase by $20,000 while liabilities would decrease by $20,000. 
B)  liabilities would decrease by $20,000 while stockholders' equity would increase by $20,000. 
C)  assets would decrease by $20,000 and liabilities would decrease by $20,000. 
D)  liabilities would decrease by $20,000 and stockholders' equity would decrease by $20,000.

Question 5

Transactions include which two types of events?

Accepted Answer

A)  Direct events, indirect events 
B)  Monetary events, production events 
C)  External exchanges, internal events 
D)  Past events, future events 
A)  Direct events, indirect events 
B)  Monetary events, production events 
C)  External exchanges, internal events 
D)  Past events, future events

Question 6

A company started the year with a normal balance of $68,000 in the Inventory account.During the year,debits totaling $45,000 and credits totaling $55,000 were posted to the Inventory account.Which of the following statements about the Inventory account is correct?

Accepted Answer

A)  The normal balance of the Inventory account is a credit balance. 
B)  After these amounts are posted, the balance in the Inventory account is a credit balance of $58,000. 
C)  The Inventory account is decreased by debits. 
D)  The debits and credits posted to the Inventory account caused it to decrease by $10,000. 
A)  The normal balance of the Inventory account is a credit balance. 
B)  After these amounts are posted, the balance in the Inventory account is a credit balance of $58,000. 
C)  The Inventory account is decreased by debits. 
D)  The debits and credits posted to the Inventory account caused it to decrease by $10,000.

Question 7

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Accepted Answer

A)  conservatism exception. 
B)  separate entity assumption. 
C)  cost principle. 
D)  monetary unit assumption. 
A)  conservatism exception. 
B)  separate entity assumption. 
C)  cost principle. 
D)  monetary unit assumption.

Question 8

Match the term with its definition.(There are more definitions than terms.)
TERM
_____ (1)dr
_____ (2)cr
_____ (3)Classified Balance Sheet
_____ (4)Common Stock
_____ (5)Accounting Equation
_____ (6)Transaction
_____ (7)Accounts Payable
_____ (8)Journal Entry
DEFINTION
A.The account credited when cash is received in exchange for stock issued.
B.Another name for stockholders' equity or shareholders' equity.
C.An exchange or event that has a direct impact on a company's financial statements.
D.A balance sheet that has not yet been publicly released.
E.When a company becomes included in the Fortune 500.
F.A method of recording a transaction in debit/credit format.
G.A transaction that is triggered automatically merely by the passage of time.
H.The abbreviation for an item posted on the left side of a T-account.
I.The expression that assets must equal liabilities plus stockholders' equity.
J.The value of a company's public relations campaign.
K.Amounts owed to suppliers for goods or services bought on credit.
L.An event that has no effect on the balance sheet and is not recorded in the financial statements.
M.Liabilities divided by assets.
N.A balance sheet that has assets and liabilities categorized as current vs.noncurrent.
O.The abbreviation for an item posted on the right side of a T-account.

Accepted Answer

(1)H
(2)O

Question 9

Meridian Furniture had the transactions for the month that are summarized below.
-Purchased $1,800 in supplies with cash.
-Issued 200 shares of stock for $45 per share.
-Ordered supplies at a cost of $4,000.
-Paid a utility bill for $500.
If the Cash account had a beginning balance of $10,000,what was the balance at the end of the month?

Accepted Answer

A)  $11,300 
B)  $12,700 
C)  $16,700 
D)  $20,300 
A)  $11,300 
B)  $12,700 
C)  $16,700 
D)  $20,300

Question 10

Listed below are components of several transactions.In the blank to the left indicate whether a debit (dr)or credit (cr)would be required to record the component of the transaction.
_____ (1)Increase in Cash.
_____ (2)Increase in Accounts Payable.
_____ (3)Decrease in Notes Payable.
_____ (4)Increase in Inventory.
_____ (5)Increase in Common Stock.
_____ (6)Decrease in Equipment.

Accepted Answer

(1)dr
(2)c

Question 11

Accounts Payable had a balance of $18,200 at the beginning of the month.During the month,three debits in the amounts of $4,700,$11,300,and $14,800 were posted to Accounts Payable,and three credits in the amounts of $3,600,$9,500,and $12,700 were posted to Accounts Payable.What is the ending balance of the Accounts Payable account?

Accepted Answer

A)  $13,200. 
B)  $5,000. 
C)  $23,200. 
D)  $49,000. 
A)  $13,200. 
B)  $5,000. 
C)  $23,200. 
D)  $49,000.

Question 12

Match each account name with the category that it would be included under in classified balance sheet.
ACCOUNT
______ (1)Equipment
______ (2)Common Stock
______ (3)Supplies
______ (4)Retained Earnings
______ (5)Accounts Receivable
______ (6)Accounts Payable
CATEGORY
CA - Current Asset
NCA - Noncurrent Asset
CL - Current Liability
NCL - Noncurrent Liability
SE - Stockholders' Equity

Accepted Answer

(1)NCA
(2)

Question 13

The Lion Corp has the following information in regard to its Cash account for the month of August.The account had a normal balance of $25,000 on August 1.During August,it had three debit entries totaling $100,000.The balance in the Cash account on August 31 was $45,000.What was the total of the credit entries to the Cash account during the month of August?

Accepted Answer

A)  $20,000 
B)  $45,000 
C)  $80,000 
D)  $120,000 
A)  $20,000 
B)  $45,000 
C)  $80,000 
D)  $120,000

Question 14

Which one of the following is not a current asset?

Accepted Answer

A)  Cash 
B)  Supplies 
C)  Equipment 
D)  Prepaid Insurance 
A)  Cash 
B)  Supplies 
C)  Equipment 
D)  Prepaid Insurance

Question 15

The journal entry to record the purchase of supplies on account includes a credit to:

Accepted Answer

A)  Cash. 
B)  Accounts Payable. 
C)  Supplies. 
D)  Accounts Receivable. 
A)  Cash. 
B)  Accounts Payable. 
C)  Supplies. 
D)  Accounts Receivable.

Question 16

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 17

For both accounts and amounts,the standard formatting for a journal entry lists:

Accepted Answer

A)  credits first and then debits, both aligned to the left. 
B)  credits first and then debits, indented underneath. 
C)  debits first and then credits, both aligned to the right. 
D)  debits first and then credits, indented to the right underneath. 
A)  credits first and then debits, both aligned to the left. 
B)  credits first and then debits, indented underneath. 
C)  debits first and then credits, both aligned to the right. 
D)  debits first and then credits, indented to the right underneath.

Question 18

How will a company's current ratio be affected by the purchase of equipment for cash?

Accepted Answer

A)  The current ratio will increase because current assets increase. 
B)  The current ratio will decrease because current liabilities increase. 
C)  The current ratio will decrease because current assets decrease. 
D)  The current ratio will remain unchanged. 
A)  The current ratio will increase because current assets increase. 
B)  The current ratio will decrease because current liabilities increase. 
C)  The current ratio will decrease because current assets decrease. 
D)  The current ratio will remain unchanged.

Question 19

A debit may increase or decrease an account,depending on the type of account.

Accepted Answer

A) True 
 B)False

Question 20

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Accepted Answer

A)  $71,200 credit. 
B)  $71,200 debit. 
C)  $66,600 debit. 
D)  $66,600 credit. 
A)  $71,200 credit. 
B)  $71,200 debit. 
C)  $66,600 debit. 
D)  $66,600 credit.

The characteristic shared by all liabilities is that they:

Consider the following journal entry: Which of the following explanations best describes this journal entry?

Which account is affected by recording the buying of goods on credit?

If a company receives $20,000 cash from its customers on account and uses the cash to pay $20,000 to its suppliers on accounts,the net result is that:

Transactions include which two types of events?

A company started the year with a normal balance of $68,000 in the Inventory account.During the year,debits totaling $45,000 and credits totaling $55,000 were posted to the Inventory account.Which of the following statements about the Inventory account is correct?

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Which one of the following is not a current asset?

The journal entry to record the purchase of supplies on account includes a credit to:

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 both accounts and amounts,the standard formatting for a journal entry lists:

How will a company's current ratio be affected by the purchase of equipment for cash?

A debit may increase or decrease an account,depending on the type of account.

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Business Decisions and Financial Accounting

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

The characteristic shared by all liabilities is that they:

Consider the following journal entry: Which of the following explanations best describes this journal entry?

Which account is affected by recording the buying of goods on credit?

If a company receives $20,000 cash from its customers on account and uses the cash to pay $20,000 to its suppliers on accounts,the net result is that:

Transactions include which two types of events?

A company started the year with a normal balance of $68,000 in the Inventory account.During the year,debits totaling $45,000 and credits totaling $55,000 were posted to the Inventory account.Which of the following statements about the Inventory account is correct?

The requirement that transactions be recorded at their exchange price at the transaction date is called the:

Which one of the following is not a current asset?

The journal entry to record the purchase of supplies on account includes a credit to:

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 both accounts and amounts,the standard formatting for a journal entry lists:

How will a company's current ratio be affected by the purchase of equipment for cash?

A debit may increase or decrease an account,depending on the type of account.

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Business Decisions and Financial Accounting

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters