Question 1

Which of the following activities is not a category into which cash flows are classified?

Accepted Answer

A) Marketing activities. 
B) Operating activities. 
C) Financing activities. 
D) Investing activities. 
A) Marketing activities. 
B) Operating activities. 
C) Financing activities. 
D) Investing activities.

Question 2

If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used in a business:

Accepted Answer

A) Total assets are increased. 
B) Total liabilities are decreased. 
C) Total assets are decreased. 
D) The owners' equity is increased. 
A) Total assets are increased. 
B) Total liabilities are decreased. 
C) Total assets are decreased. 
D) The owners' equity is increased.

Question 3

Decision makers outside the organization base their credit decisions on weekly,or even daily,financial statements.

Accepted Answer

A) True 
 B)False

Question 4

A payment of a business debt not including interest:

Accepted Answer

A) Decreases total assets. 
B) Increases total liabilities. 
C) Increases the owners' equity in the business. 
D) Decreases the owners' equity in the business. 
A) Decreases total assets. 
B) Increases total liabilities. 
C) Increases the owners' equity in the business. 
D) Decreases the owners' equity in the business.

Question 5

The balance sheet item that represents the portion of owners' equity resulting from profitable operations of the business is:

Accepted Answer

A) Accounts receivable. 
B) Cash. 
C) Capital stock. 
D) Retained earnings. 
A) Accounts receivable. 
B) Cash. 
C) Capital stock. 
D) Retained earnings.

Question 6

Which of the following is not a generally accepted accounting principle relating to the valuation of assets?

Accepted Answer

A) The cost principle - in general,assets are valued at cost,rather than at estimated market values. 
B) The objectivity principle - accountants prefer to use objective,rather than subjective,information as the basis for accounting information. 
C) The safety principle - assets are valued at no more than the value for which they are insured. 
D) The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them. 
A) The cost principle - in general,assets are valued at cost,rather than at estimated market values. 
B) The objectivity principle - accountants prefer to use objective,rather than subjective,information as the basis for accounting information. 
C) The safety principle - assets are valued at no more than the value for which they are insured. 
D) The going-concern assumption - one reason for valuing assets such as buildings and equipment at cost rather than at their current market values is the assumption that the business will use these assets rather than sell them.

Question 7

The entity principle states that the affairs of the owners are not part of the financial operations of a business entity and should be separated.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct if a company purchases equipment for $70,000 cash?

Accepted Answer

A) Total assets will increase by $70,000. 
B) Total assets will decrease by $70,000. 
C) Total assets will remain the same. 
D) The company's total owners' equity will decrease. 
A) Total assets will increase by $70,000. 
B) Total assets will decrease by $70,000. 
C) Total assets will remain the same. 
D) The company's total owners' equity will decrease.

Question 9

From the following accounts and amounts prepare a balance sheet for the Swell Company for December 31,2014.You must compute the amount for retained earnings to complete the balance sheet.

Accepted Answer

The answer of From the following accounts and amounts prepare...

Question 10

A net profit results from having more revenues than liabilities.

Accepted Answer

A) True 
 B)False

Question 11

Notes payable and accounts payable both require a company to pay an amount owed by a certain date.Notes payable generally have interest,while accounts payable generally do not.

Accepted Answer

A) True 
 B)False

Question 12

If a transaction causes an asset account to decrease,which of the following related effects may occur?

Accepted Answer

A) An increase of equal amount in an owners' equity account. 
B) An increase in a liability account. 
C) An increase of equal amount in another asset account. 
D) An increase in the combined total of liabilities and owners' equity. 
A) An increase of equal amount in an owners' equity account. 
B) An increase in a liability account. 
C) An increase of equal amount in another asset account. 
D) An increase in the combined total of liabilities and owners' equity.

Question 13

Capital stock represents:

Accepted Answer

A) The amount invested in the business by stockholders when shares of stock were initially issued by a corporation. 
B) The owners' equity for a business organized as a corporation. 
C) The owners' equity accumulated through profitable operations that have not been paid out as dividends. 
D) The price paid by the current owners to acquire shares of stock in the corporation,regardless of whether they bought the shares directly from the corporation or from another stockholder. 
A) The amount invested in the business by stockholders when shares of stock were initially issued by a corporation. 
B) The owners' equity for a business organized as a corporation. 
C) The owners' equity accumulated through profitable operations that have not been paid out as dividends. 
D) The price paid by the current owners to acquire shares of stock in the corporation,regardless of whether they bought the shares directly from the corporation or from another stockholder.

Question 14

The payment of a liability causes an increase in owners' equity.

Accepted Answer

A) True 
 B)False

Question 15

The sale of additional shares of capital stock will cause treasury stock to increase.

Accepted Answer

A) True 
 B)False

Question 16

If total assets equal $345,000 and total owners' equity equal $120,000,then total liabilities must equal:

Accepted Answer

A) $465,000. 
B) $225,000. 
C) $120,000. 
D) Cannot be determined from the information given. 
A) $465,000. 
B) $225,000. 
C) $120,000. 
D) Cannot be determined from the information given.

Question 17

Valuation of assets under generally accepted accounting principles
Under generally accepted accounting principles,the assets owned by a business are reported in the balance sheet at their historical cost.Identify and briefly explain two accounting principles other than the cost principle that support the valuation of assets at cost in the balance sheet.

Accepted Answer

Student may choose any two of the follow

Question 18

The major outgrowth from business failures and allegations of fraudulent financial reporting during the 1990's was the passage of the Securities and Exchange Act.

Accepted Answer

A) True 
 B)False

Question 19

Articulation between the financial statements means that they relate closely to each other on the basis of the same underlying transaction information.

Accepted Answer

A) True 
 B)False

Question 20

A strong statement of financial position shows:

Accepted Answer

A) Large amounts of liquid assets relative to the liabilities due in the near future. 
B) Large amounts of debt relative to stockholders' equity. 
C) That cash is being generated by operations. 
D) That profits are being generated by operations. 
A) Large amounts of liquid assets relative to the liabilities due in the near future. 
B) Large amounts of debt relative to stockholders' equity. 
C) That cash is being generated by operations. 
D) That profits are being generated by operations.

Exam 2: Basic Financial Statements

Which of the following activities is not a category into which cash flows are classified?

If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used in a business:

Decision makers outside the organization base their credit decisions on weekly,or even daily,financial statements.

A payment of a business debt not including interest:

The balance sheet item that represents the portion of owners' equity resulting from profitable operations of the business is:

Which of the following is not a generally accepted accounting principle relating to the valuation of assets?

The entity principle states that the affairs of the owners are not part of the financial operations of a business entity and should be separated.

Which of the following is correct if a company purchases equipment for $70,000 cash?

From the following accounts and amounts prepare a balance sheet for the Swell Company for December 31,2014.You must compute the amount for retained earnings to complete the balance sheet.

A net profit results from having more revenues than liabilities.

Notes payable and accounts payable both require a company to pay an amount owed by a certain date.Notes payable generally have interest,while accounts payable generally do not.

If a transaction causes an asset account to decrease,which of the following related effects may occur?

Capital stock represents:

The payment of a liability causes an increase in owners' equity.

The sale of additional shares of capital stock will cause treasury stock to increase.

If total assets equal $345,000 and total owners' equity equal $120,000,then total liabilities must equal:

The major outgrowth from business failures and allegations of fraudulent financial reporting during the 1990's was the passage of the Securities and Exchange Act.

Articulation between the financial statements means that they relate closely to each other on the basis of the same underlying transaction information.

A strong statement of financial position shows:

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

Filters