Question 1

-Use the information above to answer the following question.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 2

The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

Accepted Answer

A)  Equity financing refers to the money obtained through owners' contributions and reinvestments of profit. 
B)  Debt financing refers to the money obtained through loans. 
C)  The business is obligated to repay debt financing. 
D)  The business is obligated to repay equity financing. 
A)  Equity financing refers to the money obtained through owners' contributions and reinvestments of profit. 
B)  Debt financing refers to the money obtained through loans. 
C)  The business is obligated to repay debt financing. 
D)  The business is obligated to repay equity financing.

Question 3

The Hawk Co.borrowed $30,000 from a bank,depositing those funds in its bank account and signing a formal agreement to repay the loan in two years.What is the correct journal entry for this transaction?

Accepted Answer

A)  Debit notes payable and credit cash for $30,000 
B)  Debit notes payable and debit cash for $30,000 
C)  Credit notes payable and credit cash for $30,000 
D)  Debit cash and credit notes payable for $30,000 
A)  Debit notes payable and credit cash for $30,000 
B)  Debit notes payable and debit cash for $30,000 
C)  Credit notes payable and credit cash for $30,000 
D)  Debit cash and credit notes payable for $30,000

Question 4

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

Accepted Answer

A)  This is an example of a cash inflow from an investing activity. 
B)  The journal entry to record this transaction will include a credit to Cash. 
C)  This is an example of a cash outflow from a financing activity. 
D)  The journal entry to record this transaction will include a credit to Common Stock. 
A)  This is an example of a cash inflow from an investing activity. 
B)  The journal entry to record this transaction will include a credit to Cash. 
C)  This is an example of a cash outflow from a financing activity. 
D)  The journal entry to record this transaction will include a credit to Common Stock.

Question 5

The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Notes Payable 
D)  Accounts Receivable 
A)  Cash 
B)  Accounts Payable 
C)  Notes Payable 
D)  Accounts Receivable

Question 6

Which of the following statements about normal account balances is correct?

Accepted Answer

A)  Assets have debit balances and liabilities have credit balances. 
B)  Assets and liabilities have credit balances. 
C)  Assets have credit balances and liabilities have debit balances. 
D)  Assets and liabilities have debit balances. 
A)  Assets have debit balances and liabilities have credit balances. 
B)  Assets and liabilities have credit balances. 
C)  Assets have credit balances and liabilities have debit balances. 
D)  Assets and liabilities have debit balances.

Question 7

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a lower ratio means better ability to pay.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A company issues $20 million in new stock.The company later uses this money to acquire a building.What is the effect of these two transactions on the company's accounts?

Accepted Answer

A)  Buildings increases and Common Stock increases. 
B)  Buildings increases and Common Stock decreases. 
C)  Cash increases, Buildings increases, and Common Stock increases. 
D)  Cash decreases, Buildings increases, and Common Stock decreases. 
A)  Buildings increases and Common Stock increases. 
B)  Buildings increases and Common Stock decreases. 
C)  Cash increases, Buildings increases, and Common Stock increases. 
D)  Cash decreases, Buildings increases, and Common Stock decreases.

Question 10

On January 1,Kirk Corporation had total assets of $850,000.During the month,the following activities occurred:
-Kirk Corporation acquired equipment costing $6,000,promising to pay cash for it in 60 days.
-Kirk Corporation purchased $3,500 of supplies for cash.
-Kirk Corporation sold land which it had acquired 2 years ago.The land had cost $15,000 and it was sold for $15,000 cash.
-Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $1,000 per month.
What is the amount of total assets of Kirk Corporation at the end of the month?

Accepted Answer

A)  $859,500. 
B)  $856,000. 
C)  $837,500. 
D)  $840,000. 
A)  $859,500. 
B)  $856,000. 
C)  $837,500. 
D)  $840,000.

Question 11

A journal entry to record the purchase of supplies for $400 cash was properly prepared.The debit in the entry was properly posted to the related account.However,the credit in the entry was mistakenly recorded as a credit to the Supplies account.
Required:
Determine the impact of this error on the accounting equation.

Accepted Answer

The accounting equation is Assets= Liabi

Question 12

If supplies are purchased for cash:

Accepted Answer

A)  total assets will increase. 
B)  total assets will decrease. 
C)  total assets will remain the same. 
D)  stockholders' equity will increase. 
A)  total assets will increase. 
B)  total assets will decrease. 
C)  total assets will remain the same. 
D)  stockholders' equity will increase.

Question 13

The classified balance sheet for a company reported current assets of $1,623,850, total liabilities of $799,540, Common Stock of $1,000,000, and Retained Earnings of $130,260.The current ratio was 2.5.
-Use the information above to answer the following question.What is the total amount of current liabilities?

Accepted Answer

A)  $649,540. 
B)  $4,059,625. 
C)  $771,920. 
D)  $799,540. 
A)  $649,540. 
B)  $4,059,625. 
C)  $771,920. 
D)  $799,540.

Question 14

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

Accepted Answer

A)  $20,000 increase 
B)  $20,000 decrease 
C)  $30,000 increase 
D)  $30,000 decrease 
A)  $20,000 increase 
B)  $20,000 decrease 
C)  $30,000 increase 
D)  $30,000 decrease

Question 15

What does the current ratio measure?

Accepted Answer

A)  The relative proportion of current versus noncurrent assets 
B)  Whether current assets are sufficient to pay current liabilities 
C)  The speed which current assets can be converted to cash 
D)  Whether cash is sufficient to pay current liabilities 
A)  The relative proportion of current versus noncurrent assets 
B)  Whether current assets are sufficient to pay current liabilities 
C)  The speed which current assets can be converted to cash 
D)  Whether cash is sufficient to pay current liabilities

Question 16

When a company prepares a classified balance sheet,stockholders' equity accounts must be shown in subcategories of current and noncurrent.

Accepted Answer

A) True 
 B)False

Question 17

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements about transaction analysis is not correct?

Accepted Answer

A)  A transaction is an exchange or event that has a direct and measurable financial effect. 
B)  Every transaction has at least two effects. 
C)  Cash is the account credited when a bank loan is repaid. 
D)  Notes Payable is the account debited when money is borrowed from a bank using a promissory note. 
A)  A transaction is an exchange or event that has a direct and measurable financial effect. 
B)  Every transaction has at least two effects. 
C)  Cash is the account credited when a bank loan is repaid. 
D)  Notes Payable is the account debited when money is borrowed from a bank using a promissory note.

Question 19

In a classified balance sheet,assets and liabilities are classified according to whether they are current or noncurrent.Which of the following statements is not correct about current assets?

Accepted Answer

A)  They will be acquired within one year. 
B)  They will be converted to cash within one year. 
C)  They will be sold within one year. 
D)  They will be used up within one year. 
A)  They will be acquired within one year. 
B)  They will be converted to cash within one year. 
C)  They will be sold within one year. 
D)  They will be used up within one year.

Question 20

A company issues $20 million in new stock.It later uses the cash received to pay off promissory notes.What accounts are affected by these two transactions?

Accepted Answer

A)  Common Stock, Cash, and Notes Payable. 
B)  Common Stock, Cash, Investments, and Notes Payable. 
C)  Cash, Common Stock, and Accounts Payable. 
D)  Common Stock, Investments, and Notes Payable. 
A)  Common Stock, Cash, and Notes Payable. 
B)  Common Stock, Cash, Investments, and Notes Payable. 
C)  Cash, Common Stock, and Accounts Payable. 
D)  Common Stock, Investments, and Notes Payable.

-Use the information above to answer the following question.What is the amount of Total Liabilities on the Balance Sheet?

The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

The Hawk Co.borrowed $30,000 from a bank,depositing those funds in its bank account and signing a formal agreement to repay the loan in two years.What is the correct journal entry for this transaction?

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Which of the following statements about normal account balances is correct?

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a lower ratio means better ability to pay.

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

A company issues $20 million in new stock.The company later uses this money to acquire a building.What is the effect of these two transactions on the company's accounts?

If supplies are purchased for cash:

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

What does the current ratio measure?

When a company prepares a classified balance sheet,stockholders' equity accounts must be shown in subcategories of current and noncurrent.

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

Which of the following statements about transaction analysis is not correct?

In a classified balance sheet,assets and liabilities are classified according to whether they are current or noncurrent.Which of the following statements is not correct about current assets?

A company issues $20 million in new stock.It later uses the cash received to pay off promissory notes.What accounts are affected by these two transactions?

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

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

-Use the information above to answer the following question.What is the amount of Total Liabilities on the Balance Sheet?

The Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is not correct?

The Hawk Co.borrowed $30,000 from a bank,depositing those funds in its bank account and signing a formal agreement to repay the loan in two years.What is the correct journal entry for this transaction?

B.Darin Company issued common stock to investors and received $50,000.Which of the following statements about this transaction is correct?

The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Which of the following statements about normal account balances is correct?

The current ratio can be used to evaluate a company's ability to pay liabilities in the short term,and in general,a lower ratio means better ability to pay.

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

A company issues $20 million in new stock.The company later uses this money to acquire a building.What is the effect of these two transactions on the company's accounts?

If supplies are purchased for cash:

If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

What does the current ratio measure?

When a company prepares a classified balance sheet,stockholders' equity accounts must be shown in subcategories of current and noncurrent.

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

Which of the following statements about transaction analysis is not correct?

In a classified balance sheet,assets and liabilities are classified according to whether they are current or noncurrent.Which of the following statements is not correct about current assets?

A company issues $20 million in new stock.It later uses the cash received to pay off promissory notes.What accounts are affected by these two transactions?

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

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