Question 1

A transaction caused an increase in both assets and owners' equity.This transaction could have been resulted from the:

Accepted Answer

A) Sale of services to a customer. 
B) Sale of land for a price less than its cost. 
C) Borrowing money from a bank. 
D) Sale of land for cash at a price equal to its cost. 
A) Sale of services to a customer. 
B) Sale of land for a price less than its cost. 
C) Borrowing money from a bank. 
D) Sale of land for cash at a price equal to its cost. A

Question 2

Accounting equation
(A.)During the current year,the assets of Duffy Stationery increased by $650,000 and the liabilities decreased by $340,000.What was the change in owners' equity during the year?
(B.)The owners' equity of Graham Interiors appears on the balance sheet as $720,000 and is equal to one-fourth of total assets.Compute the amount of total liabilities.
(C.)At the end of the year,the owners' equity in Scott Mfg.amounted to $845,000.During 2014,the assets of the business increased by $515,000 and the liabilities increased by $205,000.The owners' equity at the beginning of 2014 was how much?

Accepted Answer

(A.)$990,000 increase (B.)$2,160,000 (C.)$535,000

Question 3

If total assets equal $270,000 and total liabilities equal $202,500,the total owners' equity must equal:

Accepted Answer

A) $472,500. 
B) $67,500. 
C) $270,000. 
D) Cannot be determined from the information given. 
A) $472,500. 
B) $67,500. 
C) $270,000. 
D) Cannot be determined from the information given. B

Question 4

Which of the following statements regarding liquidity and profitability is not true?

Accepted Answer

A) If a business is unable to pay its debts as they come due,it is operating unprofitably. 
B) A business may be liquid,yet operate unprofitably for several years. 
C) A business may operate profitably,yet be unable to meet its obligations. 
D) In order to survive in the long-run,a business must both remain liquid and operate profitably. 
A) If a business is unable to pay its debts as they come due,it is operating unprofitably. 
B) A business may be liquid,yet operate unprofitably for several years. 
C) A business may operate profitably,yet be unable to meet its obligations. 
D) In order to survive in the long-run,a business must both remain liquid and operate profitably.

Question 5

Preparation of balance sheet
Prepare the balance sheet as of December 31,2014,for Gamma Company,from the following list of items which are arranged in random order.You must compute the amount for accounts payable to complete the balance sheet.

Accepted Answer

The answer of Preparation of balance sheet
Prepare the balance sheet...

Question 6

The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant's balance sheet.The reporting of this item in this manner violated the:

Accepted Answer

A) Cost principle. 
B) Business entity concept. 
C) Objectivity principle. 
D) Going-concern assumption. 
A) Cost principle. 
B) Business entity concept. 
C) Objectivity principle. 
D) Going-concern assumption.

Question 7

Which business organization is recognized as a separate legal entity under the law?

Accepted Answer

A) Corporation. 
B) Sole proprietorship. 
C) Partnership. 
D) All business organizations are separate legal entities. 
A) Corporation. 
B) Sole proprietorship. 
C) Partnership. 
D) All business organizations are separate legal entities.

Question 8

It is not unusual for an entity to report a significant increase in cash from operating activities,but a decrease in the total amount of cash.

Accepted Answer

A) True 
 B)False

Question 9

Blue Wholesale Shirt Co.sold shirts to Pink Retail Shoppe.The owner of Pink Retail said she would pay Blue at a later date,which Blue Wholesale agreed to.Blue Wholesale Shirt Co.is considered to be a:

Accepted Answer

A) borrower. 
B) liability. 
C) creditor. 
D) debtor. 
A) borrower. 
B) liability. 
C) creditor. 
D) debtor.

Question 10

If cash flows from operating activities is a positive amount,then:

Accepted Answer

A) The amount will be shown on the statement of cash flows in parentheses. 
B) The company must have had a net profit for the year. 
C) The company must have paid off more debts than it earned during the year. 
D) The company may still have a decrease in the total amount of cash for the period. 
A) The amount will be shown on the statement of cash flows in parentheses. 
B) The company must have had a net profit for the year. 
C) The company must have paid off more debts than it earned during the year. 
D) The company may still have a decrease in the total amount of cash for the period.

Question 11

Owners' equity in a business decreases as a result of which of the following?

Accepted Answer

A) Investments of cash by the owners. 
B) Profits from operating the business. 
C) Losses from unprofitable operation of the business. 
D) Repaying a loan to a commercial bank. 
A) Investments of cash by the owners. 
B) Profits from operating the business. 
C) Losses from unprofitable operation of the business. 
D) Repaying a loan to a commercial bank.

Question 12

The principle of adequate disclosure means that a company should disclose:

Accepted Answer

A) Only the important monetary information. 
B) All confidential information regarding the company. 
C) Any financial facts that a reasonably informed person would consider necessary for the proper interpretation of the financial statements. 
D) Only subsequent events. 
A) Only the important monetary information. 
B) All confidential information regarding the company. 
C) Any financial facts that a reasonably informed person would consider necessary for the proper interpretation of the financial statements. 
D) Only subsequent events.

Question 13

The collection of an account receivable will cause total assets to decrease.

Accepted Answer

A) True 
 B)False

Question 14

An expense is best defined as:

Accepted Answer

A) Any payment of cash for the benefit of the company. 
B) Past,present,or future payments of cash required to generate revenues. 
C) Past payments of cash required to generate revenues. 
D) Future payments of cash required to generate revenues. 
A) Any payment of cash for the benefit of the company. 
B) Past,present,or future payments of cash required to generate revenues. 
C) Past payments of cash required to generate revenues. 
D) Future payments of cash required to generate revenues.

Question 15

Effects of transactions on elements of the accounting equation
Some of the transactions carried out by Tsang Company during the first month of the company's operations are listed below.You are to determine the dollar effect of each transaction on the total assets,the total liabilities,and the owners' equity of Tsang Company.Use the symbols (+)for increase,(-)for decrease,and (NC)for no change.An answer is provided for the first transaction to serve as an example.

Accepted Answer

The answer of Effects of transactions on elements of the...

Question 16

During the month of May,Henderson Company had the following transactions: * Revenues of $60,000 were earned and received in cash.
* Bank loans of $9,000 were paid off.
* Equipment of $20,000 was purchased.
* Expenses of $36,800 were paid.
* Stockholders purchased additional shares for $22,000 cash.
A statement of cash flows for May would report net cash flows from operating activities of:

Accepted Answer

A) $60,000. 
B) $16,200. 
C) $23,200. 
D) $20,000. 
A) $60,000. 
B) $16,200. 
C) $23,200. 
D) $20,000.

Question 17

Effects of transactions on elements of the accounting equation
Some of the transactions carried out by Tudor Wholesale during the first month of the company's operations are listed below.You are to determine the effect of each transaction on the total assets,the total liabilities,and the owners' equity.Prepare your answer in columnar form,identifying each transaction by letter and using the symbols (+)for increase,(-)for decrease,and (NC)for no change.An answer is provided for the first transaction to serve as an example.

Accepted Answer

The answer of Effects of transactions on elements of the...

Question 18

A balance sheet:

Accepted Answer

A) Provides owners,investors,and other interested parties with all the financial information they need to evaluate the financial strength,profitability,and future prospects of a given business entity. 
B) Shows the current market value of the owners' equity in the business at the balance sheet date. 
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business combined with those of its owner (or owners). 
D) Shows the assets,liabilities,and owners' equity of a business entity,valued in conformity with generally accepted accounting principles. 
A) Provides owners,investors,and other interested parties with all the financial information they need to evaluate the financial strength,profitability,and future prospects of a given business entity. 
B) Shows the current market value of the owners' equity in the business at the balance sheet date. 
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business combined with those of its owner (or owners). 
D) Shows the assets,liabilities,and owners' equity of a business entity,valued in conformity with generally accepted accounting principles.

Question 19

The amount of owners' equity in a business is not affected by:

Accepted Answer

A) The percentage of total assets held in cash. 
B) The investments made in the business by the owner. 
C) The profitability of the business. 
D) The amount of dividends paid to stockholders. 
A) The percentage of total assets held in cash. 
B) The investments made in the business by the owner. 
C) The profitability of the business. 
D) The amount of dividends paid to stockholders.

Question 20

If during the current year,liabilities of Hayden Travel decreased by $50,000 and owners' equity increased by $75,000,then:

Accepted Answer

A) Assets at the end of the year total $125,000. 
B) Assets at the end of the year total $25,000. 
C) Assets increased during the year by $25,000. 
D) Assets decreased during the year by $125,000. 
A) Assets at the end of the year total $125,000. 
B) Assets at the end of the year total $25,000. 
C) Assets increased during the year by $25,000. 
D) Assets decreased during the year by $125,000.

Exam 2: Basic Financial Statements

A transaction caused an increase in both assets and owners' equity.This transaction could have been resulted from the:

If total assets equal $270,000 and total liabilities equal $202,500,the total owners' equity must equal:

Which of the following statements regarding liquidity and profitability is not true?

Preparation of balance sheet Prepare the balance sheet as of December 31,2014,for Gamma Company,from the following list of items which are arranged in random order.You must compute the amount for accounts payable to complete the balance sheet.

The owner of Westhampton Fish Eatery purchased a new car for his daughter who is away at college at a cost of $43,000 and reported this amount as Delivery Vehicle in the restaurant's balance sheet.The reporting of this item in this manner violated the:

Which business organization is recognized as a separate legal entity under the law?

It is not unusual for an entity to report a significant increase in cash from operating activities,but a decrease in the total amount of cash.

Blue Wholesale Shirt Co.sold shirts to Pink Retail Shoppe.The owner of Pink Retail said she would pay Blue at a later date,which Blue Wholesale agreed to.Blue Wholesale Shirt Co.is considered to be a:

If cash flows from operating activities is a positive amount,then:

Owners' equity in a business decreases as a result of which of the following?

The principle of adequate disclosure means that a company should disclose:

The collection of an account receivable will cause total assets to decrease.

An expense is best defined as:

A balance sheet:

The amount of owners' equity in a business is not affected by:

If during the current year,liabilities of Hayden Travel decreased by $50,000 and owners' equity increased by $75,000,then:

Accounting: Information for Decision Making

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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