Question 1

If a company purchases equipment with cash,its total assets will increase.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Limited liability means that owners of a business are only liable for the debts of the business up to the amounts they can afford.

Accepted Answer

A) True 
 B)False

Question 4

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 5

A transaction that causes an increase in an asset may also cause a decrease in another asset,an increase in a liability,or an increase in owners' equity.

Accepted Answer

A) True 
 B)False

Question 6

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.

Question 7

[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 an increase in cash of:

Accepted Answer

A) ($ 4,000). 
B) $47,000. 
C) $53,600. 
D) $96,600. 
A) ($ 4,000). 
B) $47,000. 
C) $53,600. 
D) $96,600.

Question 8

Total assets must always equal total liabilities plus total owners' equity.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct if at the end of Crystal Imports' first year of operations,Assets are $800,000 and Owners' Equity is $720,000?

Accepted Answer

A) The owner(s)must have invested $800,000 to start the business. 
B) The business must be operating profitably. 
C) Liabilities are $80,000. 
D) Liabilities are $1,520,000. 
A) The owner(s)must have invested $800,000 to start the business. 
B) The business must be operating profitably. 
C) Liabilities are $80,000. 
D) Liabilities are $1,520,000.

Question 10

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 11

If the Notes Payable balance is $25,000,then the total assets of Gordon,Inc.at December 31,2018 amount to:

Accepted Answer

A) $ 27,500. 
B) $152,500. 
C) $120,000. 
D) $165,000. 
A) $ 27,500. 
B) $152,500. 
C) $120,000. 
D) $165,000.

Question 12

Which of the following best defines an asset?

Accepted Answer

A) Something with physical form that is valued at cost in the accounting records. 
B) An economic resource owned by a business and expected to benefit future operations. 
C) An economic resource representing cash or the right to receive cash in the near future. 
D) Something owned by a business that has a ready market value. 
A) Something with physical form that is valued at cost in the accounting records. 
B) An economic resource owned by a business and expected to benefit future operations. 
C) An economic resource representing cash or the right to receive cash in the near future. 
D) Something owned by a business that has a ready market value.

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

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 2018,the assets of the business increased by $515,000 and the liabilities increased by $205,000.The owners' equity at the beginning of 2018 was how much?

Accepted Answer

(A. )$990,000 increa

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.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

[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 investing activities of:

Accepted Answer

A) ($ 4,000). 
B) $47,000. 
C) $53,600. 
D) $76,000. 
A) ($ 4,000). 
B) $47,000. 
C) $53,600. 
D) $76,000.

Question 17

If the Notes Payable is $10,000,the December 31,2018 cash balance is:

Accepted Answer

A) $ 60,000. 
B) $160,000. 
C) $ 30,000. 
D) $ 20,000. 
A) $ 60,000. 
B) $160,000. 
C) $ 30,000. 
D) $ 20,000.

Question 18

Which of the following best describes liquidity?

Accepted Answer

A) The ability to increase the value of retained earnings. 
B) The ability to pay the debts of the company as they become due. 
C) Being able to buy everything the company requires for cash. 
D) Purchasing everything the company requires on credit. 
A) The ability to increase the value of retained earnings. 
B) The ability to pay the debts of the company as they become due. 
C) Being able to buy everything the company requires for cash. 
D) Purchasing everything the company requires on credit.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 2: Basic Financial Statements

If a company purchases equipment with cash,its total assets will increase.

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:

Limited liability means that owners of a business are only liable for the debts of the business up to the amounts they can afford.

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.

A transaction that causes an increase in an asset may also cause a decrease in another asset,an increase in a liability,or an increase in owners' equity.

A strong statement of financial position shows:

Total assets must always equal total liabilities plus total owners' equity.

Which of the following is correct if at the end of Crystal Imports' first year of operations,Assets are $800,000 and Owners' Equity is $720,000?

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

If the Notes Payable balance is $25,000,then the total assets of Gordon,Inc.at December 31,2018 amount to:

Which of the following best defines an asset?

Capital stock represents:

If the Notes Payable is $10,000,the December 31,2018 cash balance is:

Which of the following best describes liquidity?

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

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.

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