Question 1

​Jade Inc.paid rent of $25,000 for the current month.This transaction:

Accepted Answer

A)  ​decreases the profitability of the company. 
B)  ​has no effect on the profitability of the company. 
C)  ​increases the liquidity of the company. 
D)  ​has no effect on the liquidity of the company.

Question 2

By keeping a running total of the effects of transactions, the accounting equation provides a framework for summarizing the effects of a series of transactions.

Accepted Answer

A) True 
 B)False

Question 3

Lewis Company has $25,000 in retained earnings, $40,000 in assets, and $11,000 in liabilities.How much is in common stock?

Accepted Answer

A)  $29,000 
B)  $25,000 
C)  $14,000 
D)  $4,000

Question 4

The first month of operation showed the net cash from operating activities to be $1,850, the net cash from investing activities to be ($3,000), and the ending cash balance to be $1,600.The net cash from financing activities must be:

Accepted Answer

A)  $450. 
B)  $2,750. 
C)  $3,250. 
D)  $6,450.

Question 5

Which of the following transactions changes the mix of assets only?

Accepted Answer

A)  Paid for supplies with cash. 
B)  Borrowed money from Second National Bank. 
C)  Received money for fees earned. 
D)  Received a utility bill.

Question 6

A to Z Corporation issued a $30,000 note payable to borrow cash from the bank.On the Statement of Cash Flows, the transaction would be classified as:

Accepted Answer

A)  Cash Flows from Operating Activities. 
B)  Cash Flows from Investing Activities. 
C)  Cash Flows from Financing Activities. 
D)  Noncash transaction.

Question 7

Johnson, Inc.issued $15,000 in common stock in exchange for cash.What is the effect of this transaction?

Accepted Answer

A)  Total assets remain unchanged. 
B)  Cash flow from Financing Activities will increase. 
C)  Net Income will increase. 
D)  Total Retained Earnings will increase.

Question 8

The accounting equation is expressed as follows: Assets = Liabilities + Stockholders' Equity.

Accepted Answer

A) True 
 B)False

Question 9

The payment of $20,000 for expenses was incorrectly recorded by Elite Co.as an increase in cash of $20,000 and a decrease in retained earnings of $20,000.What is the effect of this error on the accounting equation?

Accepted Answer

A)  Total assets will exceed total liabilities and stockholders' equity by $20,000. 
B)  Total assets will exceed total liabilities and stockholders' equity by $40,000. 
C)  Total assets will be less than total liabilities and stockholders' equity by $40,000. 
D)  The error will not affect the accounting equation.

Question 10

When an account receivable is collected in cash, the total assets of the business increase.

Accepted Answer

A) True 
 B)False

Question 11

The basic elements of a financial accounting system include a framework for preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 12

How can a company earn a large net income and have a small balance in retained earnings?

Accepted Answer

The answer of How can a company earn a large...

Question 13

JNC Company sells its products for cash, at a profit of 20%.Which of the following financial statement elements are affected as a result of this transaction?

Accepted Answer

A)  Assets 
B)  Assets and liabilities 
C)  Liabilities and stockholders' equity 
D)  Assets and stockholders' equity

Question 14

A business receives $10,000 cash for a sale of merchandise and records this receipt of cash as an increase in accounts receivable by mistake.The accounting equation is still in balance.

Accepted Answer

A) True 
 B)False

Question 15

The following are included in Ace Auto Parts, Inc.'s December 31, 2016 balance sheet: $$\begin{array}{l}
\begin{array} { | l | r | } 
\hline \text { Accounts Receivable } & \$ 50,000 \
\hline \text { Building } & 100,000 \
\hline \text { Cash } & 60,000 \
\hline \text { Land } & 130,000 \
\hline \text { Accounts Payable } & 40,000 \
\hline \text { Notes Payable } & 70,000 \
\hline \text { Stockholders' Equity } & ? \
\hline
\end{array}\
\text { Below are the balances for December 31, 2016: }\
\begin{array} { | l | r | } 
\hline \text { Accounts Receivable } & \$ 90,000 \
\hline \text { Building } & 100,000 \
\hline \text { Cash } & 150,000 \
\hline \text { Land } & 130,000 \
\hline \text { Accounts Payable } & 60,000 \
\hline \text { Notes Payable } & 50,000 \
\hline \text { Stockholders' Equity } & \text { ? } \
\hline
\end{array}
\end{array}$$ Analyze the changes in these balances and determine net income for 2017, assuming that the only change to stockholders' equity is from net income.

Accepted Answer

The answer of The following are included in Ace Auto...

Question 16

Brite Inc.had the following assets and liabilities at the end of the year: $$\begin{array} { l l } 
\text { Assets } & \$ 54,800 \
\text { Liabilities } & \$ 32,000
\end{array}$$ What is the year-end stockholders' equity of Brite Inc.?

Accepted Answer

A)  $32,000 
B)  $22,800 
C)  $86,800 
D)  Cannot be determined with this information

Question 17

ABC Inc.borrows $50,000 from a bank to finance its operations.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?​

Accepted Answer

A)  ​The transaction decreases the liquidity and increases the profitability of ABC Inc. 
B)  ​The transaction increases the liquidity and decreases the profitability of ABC Inc. 
C)  ​The transaction has no effect on the liquidity and profitability of ABC Inc. 
D)  ​The transaction increases the liquidity and has no effect on the profitability of ABC Inc.
​

Question 18

Which of the following situations increase stockholders' equity?

Accepted Answer

A)  Supplies are purchased on account. 
B)  Services are provided on account. 
C)  Cash is received from customers. 
D)  Utility bill will be paid next month.

Question 19

For EFG Co., the transaction "purchase of store equipment with a note payable" would:

Accepted Answer

A)  increase total assets. 
B)  decrease total assets. 
C)  have no effect on total assets. 
D)  decrease total liabilities.

Question 20

Navy Inc.buys land for $500,000 cash in the month of March.In March, it also paid wages of $100,000.Which of the following statements is true with regards to the above transactions?​

Accepted Answer

A)  ​Navy Inc.'s profitability decreases by $500,000, and liquidity decreases by $100,000. 
B)  ​Navy Inc.'s liquidity decreases by $600,000, and profitability remains unchanged. 
C)  ​Navy Inc.'s liquidity and profitability decrease by $600,000. 
D)  ​Navy Inc.'s liquidity decreases by $600,000, and profitability decreases by $100,000.

Exam 2: Basic Accounting Systems: Cash Basis

Jade Inc.paid rent of $25,000 for the current month.This transaction:

By keeping a running total of the effects of transactions, the accounting equation provides a framework for summarizing the effects of a series of transactions.

Lewis Company has $25,000 in retained earnings, $40,000 in assets, and $11,000 in liabilities.How much is in common stock?

The first month of operation showed the net cash from operating activities to be $1,850, the net cash from investing activities to be ($3,000) , and the ending cash balance to be $1,600.The net cash from financing activities must be:

Which of the following transactions changes the mix of assets only?

A to Z Corporation issued a $30,000 note payable to borrow cash from the bank.On the Statement of Cash Flows, the transaction would be classified as:

Johnson, Inc.issued $15,000 in common stock in exchange for cash.What is the effect of this transaction?

The accounting equation is expressed as follows: Assets = Liabilities + Stockholders' Equity.

The payment of $20,000 for expenses was incorrectly recorded by Elite Co.as an increase in cash of $20,000 and a decrease in retained earnings of $20,000.What is the effect of this error on the accounting equation?

When an account receivable is collected in cash, the total assets of the business increase.

The basic elements of a financial accounting system include a framework for preparing financial statements.

How can a company earn a large net income and have a small balance in retained earnings?

JNC Company sells its products for cash, at a profit of 20%.Which of the following financial statement elements are affected as a result of this transaction?

A business receives $10,000 cash for a sale of merchandise and records this receipt of cash as an increase in accounts receivable by mistake.The accounting equation is still in balance.

Brite Inc.had the following assets and liabilities at the end of the year: $\begin{array} { l l } \text { Assets } & \$ 54,800 \\\text { Liabilities } & \$ 32,000\end{array}$ What is the year-end stockholders' equity of Brite Inc.?

ABC Inc.borrows $50,000 from a bank to finance its operations.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?

Which of the following situations increase stockholders' equity?

For EFG Co., the transaction "purchase of store equipment with a note payable" would:

Navy Inc.buys land for $500,000 cash in the month of March.In March, it also paid wages of $100,000.Which of the following statements is true with regards to the above transactions?

Exam 2: Basic Accounting Systems: Cash Basis

​Jade Inc.paid rent of $25,000 for the current month.This transaction:

By keeping a running total of the effects of transactions, the accounting equation provides a framework for summarizing the effects of a series of transactions.

Lewis Company has $25,000 in retained earnings, $40,000 in assets, and $11,000 in liabilities.How much is in common stock?

The first month of operation showed the net cash from operating activities to be $1,850, the net cash from investing activities to be ($3,000) , and the ending cash balance to be $1,600.The net cash from financing activities must be:

Which of the following transactions changes the mix of assets only?

A to Z Corporation issued a $30,000 note payable to borrow cash from the bank.On the Statement of Cash Flows, the transaction would be classified as:

Johnson, Inc.issued $15,000 in common stock in exchange for cash.What is the effect of this transaction?

The accounting equation is expressed as follows: Assets = Liabilities + Stockholders' Equity.

The payment of $20,000 for expenses was incorrectly recorded by Elite Co.as an increase in cash of $20,000 and a decrease in retained earnings of $20,000.What is the effect of this error on the accounting equation?

When an account receivable is collected in cash, the total assets of the business increase.

The basic elements of a financial accounting system include a framework for preparing financial statements.

How can a company earn a large net income and have a small balance in retained earnings?

JNC Company sells its products for cash, at a profit of 20%.Which of the following financial statement elements are affected as a result of this transaction?

A business receives $10,000 cash for a sale of merchandise and records this receipt of cash as an increase in accounts receivable by mistake.The accounting equation is still in balance.

ABC Inc.borrows $50,000 from a bank to finance its operations.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?​

Which of the following situations increase stockholders' equity?

For EFG Co., the transaction "purchase of store equipment with a note payable" would:

Navy Inc.buys land for $500,000 cash in the month of March.In March, it also paid wages of $100,000.Which of the following statements is true with regards to the above transactions?​

Jade Inc.paid rent of $25,000 for the current month.This transaction:

ABC Inc.borrows $50,000 from a bank to finance its operations.Which of the following statements regarding the effect of this transaction on the company's liquidity and profitability metric is true?

Navy Inc.buys land for $500,000 cash in the month of March.In March, it also paid wages of $100,000.Which of the following statements is true with regards to the above transactions?