Question 1

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. C

Question 2

Accounting terminology
Listed below are nine technical accounting terms introduced in this chapter:   Each of the following statements may (or may not)describe one of these technical terms.In the space provided below each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms.Do not use a term more than once.
(A. )Having the financial ability to pay debts as they become due.
(B. )An assumption that a business will operate in the foreseeable future.
(C. )Economic resources owned by businesses that are expected to benefit future operations.
(D. )The debts or obligations of a business organization.
(E. )Assets = Liabilities + Owners' Equity
(F. )The principle which states that assets are valued in the balance sheet at their historical cost.
(G. )A residual amount equal to assets minus liabilities.

Accepted Answer

(A. )Liquidity; (B. )Going concern assumption; (C. )Assets; (D. )Liabilities; (E. )Accounting equation; (F. )Cost principle; (G. )Owners' equity

Question 3

A transaction caused a $60,000 increase in both total assets and total liabilities.This transaction could have been which of the following?

Accepted Answer

A) Purchase for office equipment for $60,000 cash. 
B) Purchase of office equipment for $120,000,paying $60,000 cash and issuing a note payable for the balance. 
C) Repayment of a $60,000 bank loan. 
D) Investment of $60,000 cash in the business by the owner. 
A) Purchase for office equipment for $60,000 cash. 
B) Purchase of office equipment for $120,000,paying $60,000 cash and issuing a note payable for the balance. 
C) Repayment of a $60,000 bank loan. 
D) Investment of $60,000 cash in the business by the owner. B

Question 4

Preparation of balance sheet
Prepare the balance sheet as of December 31,2018,for Gamma Company,from the following list of items,arranged in random order.You must compute the amount for accounts payable to complete the balance sheet.

Accepted Answer

GAMMA Comp

Question 5

Bob Bertolucci,owner of Bob's Bazaar,also owns a personal residence that costs $575,000.The market value of his residence is $725,000.During preparation of the financial statements for Bob's Bazaar,the accounting principle most relevant to the presentation of Bob's home is:

Accepted Answer

A) The concept of the business entity. 
B) The cost principle. 
C) The going-concern assumption. 
D) The objectivity principle. 
A) The concept of the business entity. 
B) The cost principle. 
C) The going-concern assumption. 
D) The objectivity principle.

Question 6

To appear in a balance sheet of a business entity,an asset need not:

Accepted Answer

A) Be an economic resource. 
B) Have a ready market value. 
C) Be expected to benefit future operations. 
D) Be owned by the business. 
A) Be an economic resource. 
B) Have a ready market value. 
C) Be expected to benefit future operations. 
D) Be owned by the business.

Question 7

Financial statements
A set of financial statements includes three related accounting reports,or statements.In the space provided,list the names of three primary statements,and give a brief description of the accounting information contained in each.

Accepted Answer

* Balance sheet.A report showing at a sp

Question 8

Window dressing occurs when management attempts to make a company look financially stronger than it actually is.

Accepted Answer

A) True 
 B)False

Question 9

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.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 10

Effects of transactions on balance sheet items
Show the effect of each of the six listed transactions on the balance sheet items of Renaissance Investment Services,Inc.Indicate the new balances after the transaction of November 2 and each subsequent transaction.The effects of the November 1 transaction are already filled in to provide you with an example.

Accepted Answer

The answer of Effects of transactions on balance sheet items
Show...

Question 11

If a company purchases equipment by issuing a note payable,its total assets will not change.

Accepted Answer

A) True 
 B)False

Question 12

If Capital Stock is $260,000,what is the December 31,2018 cash balance?

Accepted Answer

A) $86,000. 
B) $94,000. 
C) $46,000. 
D) $686,000. 
A) $86,000. 
B) $94,000. 
C) $46,000. 
D) $686,000.

Question 13

If Capital Stock is $320,000,total assets of Braun Corporation at December 31,2018,amounts to:

Accepted Answer

A) $686,000. 
B) $926,000. 
C) $726,000. 
D) $106,000. 
A) $686,000. 
B) $926,000. 
C) $726,000. 
D) $106,000.

Question 14

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.

Question 15

Which of the following transactions would cause a change in owners' equity?

Accepted Answer

A) Repayment of the principal on a bank loan. 
B) Purchase of a delivery truck on credit. 
C) Sale of land on credit for a price above cost. 
D) Borrowing money from a bank. 
A) Repayment of the principal on a bank loan. 
B) Purchase of a delivery truck on credit. 
C) Sale of land on credit for a price above cost. 
D) Borrowing money from a bank.

Question 16

The owner of a sole proprietorship is personally liable for the debts of the business,whereas the stockholders of a corporation are not personally liable for the debts of the business.

Accepted Answer

A) True 
 B)False

Question 17

If a company purchases equipment for $65,000 by issuing a note payable:

Accepted Answer

A) Total assets will increase by $65,000. 
B) Total assets will decrease by $65,000. 
C) Total assets will remain the same. 
D) Total owners' equity will decrease. 
A) Total assets will increase by $65,000. 
B) Total assets will decrease by $65,000. 
C) Total assets will remain the same. 
D) Total owners' equity will decrease.

Question 18

[The following information applies to the questions displayed below.]
During the month of February,Fadness Company had the following transactions:
(1)Revenues of $225,000 were earned and received in cash.
(2)Bank loans of $18,000 were paid off.
(3)New bank loans of $15,000 were incurred.
(4)Equipment of $40,000 was purchased with cash.
(5)Equipment was sold for its book value of $36,000.Cash was received.
(6)Expenses of $171,400 were paid.
(7)Stockholders purchased additional shares for $50,000 cash.
-A statement of cash flows for February would report net cash flows from financing activities of:

Accepted Answer

A) $4,000. 
B) $47,000. 
C) $83,000. 
D) $96,600. 
A) $4,000. 
B) $47,000. 
C) $83,000. 
D) $96,600.

Question 19

From the following accounts and amounts prepare a balance sheet for the Swell Company for December 31,2018.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 20

At the end of the current year,the owners' equity in Durante Co.is $360,000.During the year,the assets of the business had increased by $68,000 and the liabilities had increased by $118,000.Owners' equity at the beginning of the year must have been:

Accepted Answer

A) $410,000. 
B) $310,000. 
C) $546,000. 
D) $174,000. 
A) $410,000. 
B) $310,000. 
C) $546,000. 
D) $174,000.

Exam 2: Basic Financial Statements

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

A transaction caused a $60,000 increase in both total assets and total liabilities.This transaction could have been which of the following?

Preparation of balance sheet Prepare the balance sheet as of December 31,2018,for Gamma Company,from the following list of items,arranged in random order.You must compute the amount for accounts payable to complete the balance sheet.

Bob Bertolucci,owner of Bob's Bazaar,also owns a personal residence that costs $575,000.The market value of his residence is $725,000.During preparation of the financial statements for Bob's Bazaar,the accounting principle most relevant to the presentation of Bob's home is:

To appear in a balance sheet of a business entity,an asset need not:

Financial statements A set of financial statements includes three related accounting reports,or statements.In the space provided,list the names of three primary statements,and give a brief description of the accounting information contained in each.

Window dressing occurs when management attempts to make a company look financially stronger than it actually is.

If a company purchases equipment by issuing a note payable,its total assets will not change.

If Capital Stock is $260,000,what is the December 31,2018 cash balance?

If Capital Stock is $320,000,total assets of Braun Corporation at December 31,2018,amounts to:

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

Which of the following transactions would cause a change in owners' equity?

The owner of a sole proprietorship is personally liable for the debts of the business,whereas the stockholders of a corporation are not personally liable for the debts of the business.

If a company purchases equipment for $65,000 by issuing a note payable:

From the following accounts and amounts prepare a balance sheet for the Swell Company for December 31,2018.You must compute the amount for retained earnings to complete the balance sheet.

At the end of the current year,the owners' equity in Durante Co.is $360,000.During the year,the assets of the business had increased by $68,000 and the liabilities had increased by $118,000.Owners' equity at the beginning of the year must have been:

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters