Question 1

Which of the following is not considered to be a recordable transaction?

Accepted Answer

A) Signing a contract to have an outside cleaning service clean offices nightly. 
B) Paying employees their wages. 
C) Selling stock to investors. 
D) Buying equipment and agreeing to pay a note payable and interest at the end of a year. 
A) Signing a contract to have an outside cleaning service clean offices nightly. 
B) Paying employees their wages. 
C) Selling stock to investors. 
D) Buying equipment and agreeing to pay a note payable and interest at the end of a year.

Question 2

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Accepted Answer

A) Assets and retained earnings each increased $200,000. 
B) Assets and revenues each increased $200,000. 
C) Stockholders' equity and revenues each increased $200,000. 
D) Stockholders' equity and assets each increased $200,000. 
A) Assets and retained earnings each increased $200,000. 
B) Assets and revenues each increased $200,000. 
C) Stockholders' equity and revenues each increased $200,000. 
D) Stockholders' equity and assets each increased $200,000.

Question 3

Which of the following transactions would not be considered an external exchange?

Accepted Answer

A) The purchase of supplies on credit. 
B) Cash received from the issuance of common stock. 
C) Cash paid to a bank for interest on a loan. 
D) Using up insurance, which had been paid for in advance. 
A) The purchase of supplies on credit. 
B) Cash received from the issuance of common stock. 
C) Cash paid to a bank for interest on a loan. 
D) Using up insurance, which had been paid for in advance.

Question 4

Which of the following assumptions implies that a business can continue to remain in operation into the foreseeable future?

Accepted Answer

A) Historical cost principle. 
B) Monetary unit assumption. 
C) Continuity assumption. 
D) Separate-entity assumption. 
A) Historical cost principle. 
B) Monetary unit assumption. 
C) Continuity assumption. 
D) Separate-entity assumption.

Question 5

Which of the following describes the impact on the balance sheet of paying a current liability using cash?

Accepted Answer

A) Current assets will decrease. 
B) Current liabilities will increase. 
C) Stockholders' equity will decrease. 
D) Total assets will remain the same. 
A) Current assets will decrease. 
B) Current liabilities will increase. 
C) Stockholders' equity will decrease. 
D) Total assets will remain the same.

Question 6

A corporation has $80,000 in total assets, $36,000 in total liabilities, and a $12,000 credit balance in retained earnings. What is the balance in the contributed capital accounts?

Accepted Answer

A) $56,000. 
B) $44,000. 
C) $48,000. 
D) $32,000. 
A) $56,000. 
B) $44,000. 
C) $48,000. 
D) $32,000.

Question 7

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Accepted Answer

The investing activities section of the

Question 8

At the beginning of April, Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash.
A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable.
Short-term investments costing $9,000 were purchased using cash.
$10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for the loan.
How much are Warren's total assets at the end of April?

Accepted Answer

A) $335,000. 
B) $249,000. 
C) $345,000. 
D) $250,000. 
A) $335,000. 
B) $249,000. 
C) $345,000. 
D) $250,000.

Question 9

Which of the following best describes financing activities?

Accepted Answer

A) They primarily deal with securing money by bank loans or selling stock to investors. 
B) They primarily are connected to the income-producing activities of the company as reported on the income statement. 
C) They primarily deal with buying buildings to be used over many years by the business. 
D) They primarily deal with selling facilities once used by the business. 
A) They primarily deal with securing money by bank loans or selling stock to investors. 
B) They primarily are connected to the income-producing activities of the company as reported on the income statement. 
C) They primarily deal with buying buildings to be used over many years by the business. 
D) They primarily deal with selling facilities once used by the business.

Question 10

A company with a high current ratio should never have liquidity problems.

Accepted Answer

A) True 
 B)False

Question 11

Borrowing cash from a bank would result in which of the following?

Accepted Answer

A) A debit to cash and a credit to notes payable. 
B) A debit to notes payable and a credit to cash. 
C) A debit to both cash and notes payable. 
D) A debit to cash and a credit to additional paid-in capital. 
A) A debit to cash and a credit to notes payable. 
B) A debit to notes payable and a credit to cash. 
C) A debit to both cash and notes payable. 
D) A debit to cash and a credit to additional paid-in capital.

Question 12

The T-account is an actual account in the general ledger of the accounting records.

Accepted Answer

A) True 
 B)False

Question 13

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is true?

Accepted Answer

A) Contributed capital is a noncurrent asset. 
B) Current liabilities are debts expected to be paid within the next year. 
C) Current assets are resources of a company that might include cash and copyrights. 
D) Patents, copyrights, and research and development expense are classified as intangible assets on the balance sheet. 
A) Contributed capital is a noncurrent asset. 
B) Current liabilities are debts expected to be paid within the next year. 
C) Current assets are resources of a company that might include cash and copyrights. 
D) Patents, copyrights, and research and development expense are classified as intangible assets on the balance sheet.

Question 15

How is the current ratio calculated and what does it measure?

Accepted Answer

The current ratio is current assets divi

Question 16

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Accepted Answer

A) True 
 B)False

Question 17

Selling stock to investors for cash would result in which of the following?

Accepted Answer

A) A debit to additional paid-in capital and a credit to cash. 
B) A credit to both cash and additional paid-in capital. 
C) A debit to cash and a credit to common stock. 
D) A debit to cash and a credit to the investment account. 
A) A debit to additional paid-in capital and a credit to cash. 
B) A credit to both cash and additional paid-in capital. 
C) A debit to cash and a credit to common stock. 
D) A debit to cash and a credit to the investment account.

Question 18

Which of the following would not be considered a current asset?

Accepted Answer

A) Inventory. 
B) Prepaid expenses. 
C) Land used in daily operations. 
D) Accounts receivable. 
A) Inventory. 
B) Prepaid expenses. 
C) Land used in daily operations. 
D) Accounts receivable.

Question 19

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 20

Issuing stock in exchange for cash creates an increase in cash from a financing activity.

Accepted Answer

A) True 
 B)False

Which of the following is not considered to be a recordable transaction?

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Which of the following transactions would not be considered an external exchange?

Which of the following assumptions implies that a business can continue to remain in operation into the foreseeable future?

Which of the following describes the impact on the balance sheet of paying a current liability using cash?

A corporation has $80,000 in total assets, $36,000 in total liabilities, and a $12,000 credit balance in retained earnings. What is the balance in the contributed capital accounts?

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Which of the following best describes financing activities?

A company with a high current ratio should never have liquidity problems.

Borrowing cash from a bank would result in which of the following?

The T-account is an actual account in the general ledger of the accounting records.

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Which of the following statements is true?

How is the current ratio calculated and what does it measure?

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Selling stock to investors for cash would result in which of the following?

Which of the following would not be considered a current asset?

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

Issuing stock in exchange for cash creates an increase in cash from a financing activity.

Financial Statements and Business Decisions

Operating Decisions and the Accounting System

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; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

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Exam 2: Investing and Financing Decisions and the Accounting System

Which of the following is not considered to be a recordable transaction?

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Which of the following transactions would not be considered an external exchange?

Which of the following assumptions implies that a business can continue to remain in operation into the foreseeable future?

Which of the following describes the impact on the balance sheet of paying a current liability using cash?

A corporation has $80,000 in total assets, $36,000 in total liabilities, and a $12,000 credit balance in retained earnings. What is the balance in the contributed capital accounts?

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Which of the following best describes financing activities?

A company with a high current ratio should never have liquidity problems.

Borrowing cash from a bank would result in which of the following?

The T-account is an actual account in the general ledger of the accounting records.

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Which of the following statements is true?

How is the current ratio calculated and what does it measure?

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Selling stock to investors for cash would result in which of the following?

Which of the following would not be considered a current asset?

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

Issuing stock in exchange for cash creates an increase in cash from a financing activity.

Financial Statements and Business Decisions

Operating Decisions and the Accounting System

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; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

Filters