Question 1

Which of the following liability accounts does not usually require a future cash payment?

Accepted Answer

A) Accounts payable. 
B) Unearned revenues. 
C) Taxes payable. 
D) Notes payable. 
A) Accounts payable. 
B) Unearned revenues. 
C) Taxes payable. 
D) Notes payable.

Question 2

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts?

Accepted Answer

A) An increase in a liability and a decrease in an asset. 
B) An increase in stockholders' equity and an increase in an asset. 
C) An increase in an asset and a decrease in an asset. 
D) A decrease in stockholders' equity and a decrease in an asset. 
A) An increase in a liability and a decrease in an asset. 
B) An increase in stockholders' equity and an increase in an asset. 
C) An increase in an asset and a decrease in an asset. 
D) A decrease in stockholders' equity and a decrease in an asset.

Question 4

For accounting information to be useful, it must be which of the following?

Accepted Answer

A) It must be consistent and comparable. 
B) It must be a faithful representation and relevant. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent. 
A) It must be consistent and comparable. 
B) It must be a faithful representation and relevant. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent.

Question 5

Which of the following would result when a company purchases a factory building using cash?

Accepted Answer

A) A noncurrent asset and an investing cash flow are created. 
B) A noncurrent asset and a financing cash flow are created. 
C) A current asset and an investing cash flow are created. 
D) A current asset and a financing cash flow are createD.Buildings are classified as noncurrent assets.Investing cash flows are created with the purchase or sale of noncurrent assets. 
A) A noncurrent asset and an investing cash flow are created. 
B) A noncurrent asset and a financing cash flow are created. 
C) A current asset and an investing cash flow are created. 
D) A current asset and a financing cash flow are createD.Buildings are classified as noncurrent assets.Investing cash flows are created with the purchase or sale of noncurrent assets.

Question 6

Which of the following statements is false?

Accepted Answer

A) The common stock account has a credit balance. 
B) The additional paid-in capital account has a credit balance. 
C) Common stock may be issued for more than par value. 
D) The par value of common stock represents the stock's market value. 
A) The common stock account has a credit balance. 
B) The additional paid-in capital account has a credit balance. 
C) Common stock may be issued for more than par value. 
D) The par value of common stock represents the stock's market value.

Question 7

Stockholders' equity reflects the financing provided by owners.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following journal entries is correct when a business entity issues common stock, above par value, to stockholders in exchange for cash?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

When a company borrows money from a bank, the statement of cash flows will report a cash increase from an investing activity.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about stockholders' equity is false?

Accepted Answer

A) Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. 
B) Stockholders' equity accounts are increased with credits. 
C) Stockholders' equity results only from contributions of the owners. 
D) The purchase of land for cash has no effect on stockholders' equity. 
A) Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. 
B) Stockholders' equity accounts are increased with credits. 
C) Stockholders' equity results only from contributions of the owners. 
D) The purchase of land for cash has no effect on stockholders' equity.

Question 11

Which of the following does not correctly describe business transactions or events?

Accepted Answer

A) They include exchanges of assets or services by one business for assets, services, or promises to pay from another business. 
B) They include the using up of insurance paid for in advance. 
C) They have an economic impact on a business entity. 
D) They do not include measurable internal events such as the use of assets in operations. 
A) They include exchanges of assets or services by one business for assets, services, or promises to pay from another business. 
B) They include the using up of insurance paid for in advance. 
C) They have an economic impact on a business entity. 
D) They do not include measurable internal events such as the use of assets in operations.

Question 12

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 13

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Accepted Answer

A) A debit to retained earnings and a credit to cash. 
B) A debit to additional paid-in capital and a credit to dividends payable. 
C) A debit to cash and a credit to retained earnings. 
D) A debit to retained earnings and a credit to dividends payable. 
A) A debit to retained earnings and a credit to cash. 
B) A debit to additional paid-in capital and a credit to dividends payable. 
C) A debit to cash and a credit to retained earnings. 
D) A debit to retained earnings and a credit to dividends payable.

Question 14

Common stock and additional-paid in capital represent the financing sources from shareholders.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a result of equipment purchased with cash?

Accepted Answer

A) Total assets decrease. 
B) Current assets do not change. 
C) Current assets increase. 
D) Stockholders' equity does not change. 
A) Total assets decrease. 
B) Current assets do not change. 
C) Current assets increase. 
D) Stockholders' equity does not change.

Question 16

Assets are reported on the balance sheet in the order of liquidity.

Accepted Answer

A) True 
 B)False

Question 17

An asset account normally has a debit balance and is increased by debiting the account.

Accepted Answer

A) True 
 B)False

Question 18

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Accepted Answer

A) A credit to cash for $1,000,000. 
B) A credit to additional paid-in capital for $1,000,000. 
C) A credit to additional paid-in capital for $50,000. 
D) A credit to common stock for $50,000. 
A) A credit to cash for $1,000,000. 
B) A credit to additional paid-in capital for $1,000,000. 
C) A credit to additional paid-in capital for $50,000. 
D) A credit to common stock for $50,000.

Question 19

The Smith Corporation has provided the following information:
Cash dividend payments were $25,000.
Long-term investments were sold for $79,000 cash.
A building costing $198,000 was purchased using $19,800 cash, and the balance was financed with a mortgage note payable.
Stock was issued to stockholders in exchange for $110,000 cash.
A $44,000 loan was made to a local inventory supplier; the loan will be repaid in twelve months.
Equipment used in operations was sold for $37,000.
Repaid a long-term note payable for $92,000 cash.
Cash received from short-term bank loans totaled $71,000.
Land costing $57,000 was purchased in exchange for a long-term note payable.
Requirement:
Determine Smith's cash flows to be reported on the statement of cash flows for
1. investing activities, and 2. financing activities

Accepted Answer

1. Investing activities cash f

Question 20

Assets, liabilities, and stockholders' equity are all found within which of the following financial statements?

Accepted Answer

A) Balance sheet. 
B) Income statement. 
C) The investing activities section of the Statement of Cash Flows. 
D) Statement of stockholders' equity. 
A) Balance sheet. 
B) Income statement. 
C) The investing activities section of the Statement of Cash Flows. 
D) Statement of stockholders' equity.

Which of the following liability accounts does not usually require a future cash payment?

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts?

For accounting information to be useful, it must be which of the following?

Which of the following would result when a company purchases a factory building using cash?

Which of the following statements is false?

Stockholders' equity reflects the financing provided by owners.

Which of the following journal entries is correct when a business entity issues common stock, above par value, to stockholders in exchange for cash?

When a company borrows money from a bank, the statement of cash flows will report a cash increase from an investing activity.

Which of the following statements about stockholders' equity is false?

Which of the following does not correctly describe business transactions or events?

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year?

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Common stock and additional-paid in capital represent the financing sources from shareholders.

Which of the following is a result of equipment purchased with cash?

Assets are reported on the balance sheet in the order of liquidity.

An asset account normally has a debit balance and is increased by debiting the account.

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Assets, liabilities, and stockholders' equity are all found within which of the following financial statements?

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 liability accounts does not usually require a future cash payment?

The T-account is very useful for accumulating the effects of transactions on account balances and for determining individual account balances.

Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts?

For accounting information to be useful, it must be which of the following?

Which of the following would result when a company purchases a factory building using cash?

Which of the following statements is false?

Stockholders' equity reflects the financing provided by owners.

Which of the following journal entries is correct when a business entity issues common stock, above par value, to stockholders in exchange for cash?

When a company borrows money from a bank, the statement of cash flows will report a cash increase from an investing activity.

Which of the following statements about stockholders' equity is false?

Which of the following does not correctly describe business transactions or events?

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year?

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Common stock and additional-paid in capital represent the financing sources from shareholders.

Which of the following is a result of equipment purchased with cash?

Assets are reported on the balance sheet in the order of liquidity.

An asset account normally has a debit balance and is increased by debiting the account.

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Assets, liabilities, and stockholders' equity are all found within which of the following financial statements?

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