Question 1

What will be the effect on the balance sheet of issuing shares of common stock in exchange for cash?

Accepted Answer

A) An increase in Retained Earnings 
B) A decrease in Common Stock 
C) A decrease in Retained Earnings 
D) An increase in Common Stock

Question 2

The following is a list of account balances for Pick-A-Pet,Inc. ,as of June 30,Year 3:
 $\begin{array}{lr}
\text { Accounts Payable } & \$ 349,200 \
\text { Accounts Receivable } & 419200 \
\text { Cash } & 732600 \
\text { Common Stock } & 662,100 \
\text { Equipment } & 58,400 \
\text { Logo and Trademarks } & 421,600 \
\text { Notes Payable } & 268,900 \
\text { Retained Earnings } & 470,100 \
\text { Software } & 118,500
\end{array}$ The company entered into the following transactions during July,Year 3.Stockholders contribute $300,000 cash for additional ownership shares and the company borrows $150,000 in cash from a bank to buy new equipment at a later date.No other transactions took place during July,Year 3.
Required:
Part a.Prepare a classified balance sheet for the company at June 30,Year 3.
Part b.Show the effects of the July transactions on the basic accounting equation.
Part c.Prepare the journal entries that would be used to record the transactions.

Accepted Answer

The answer of The following is a list of account...

Question 3

For each of the following,indicate how the event would most likely be categorized.
-A company uses up supplies to manufacture a product.

Accepted Answer

A) NT - No Transaction 
B) EE - External Exchange 
C) IE - Internal Event

Question 4

The creditors' claims to a company's resources are represented by:

Accepted Answer

A) common stock. 
B) total stockholder's equity. 
C) total liabilities. 
D) retained earnings.

Question 5

Who has first claim to a business's assets should the company go out of business?

Accepted Answer

A) Creditors 
B) Stockholders 
C) Customers 
D) Management

Question 6

Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year.During the year,assets decreased by $3,500 and liabilities increased by $2,800. What is the amount of the change in stockholders' equity during the year?

Accepted Answer

A) $5,750 increase 
B) $700 decrease 
C) $6,300 decrease 
D) $550 increase

Question 7

Listed below are components of several transactions.Indicate whether a debit (dr)or credit (cr)would be required to record the component of the transaction.
-Decrease in Equipment.

Accepted Answer

A) cr 
B) dr

Question 8

T-accounts represent a simplified version of the:

Accepted Answer

A) ledger. 
B) journal. 
C) trial balance. 
D) financial statements.

Question 9

Bolt Enterprises receives $100,000 cash from its customers on account.Bolt uses the cash to pay off $100,000 on a bank loan,the net result is that:

Accepted Answer

A) assets would increase by $100,000 while liabilities would decrease by $100,000. 
B) liabilities would decrease by $100,000 while stockholders' equity would increase by $100,000. 
C) assets would decrease by $100,000 and liabilities would decrease by $100,000. 
D) liabilities would decrease by $100,000 and stockholders' equity would decrease by $100,000.

Question 10

________ are of special importance because they are the only activities that enter the financial accounting system.

Accepted Answer

A) External exchanges 
B) Internal events 
C) Documents 
D) Transactions

Question 11

Which of the following statements about transaction analysis is not correct?

Accepted Answer

A) A transaction is an exchange or event that has a direct and measurable financial effect. 
B) Every transaction has at least two effects. 
C) Cash is the account credited when a bank loan is repaid. 
D) Notes Payable is the account debited when money is borrowed from a bank using a promissory note.

Question 12

What is the effect on the balance sheet if a company purchases $100 of supplies using cash?

Accepted Answer

A) Total assets will remain the same. 
B) Total assets will decrease. 
C) Liabilities will decrease. 
D) Total assets will increase.

Question 13

On January 1,Year 3,Wayfarer Co.'s assets were $240,000 and its stockholders' equity was $112,000.During the year,assets increased $12,000 and liabilities decreased $8,000.
Required:
Determine the amount of stockholders' equity at December 31,Year 3.

Accepted Answer

The answer of On January 1,Year 3,Wayfarer Co.'s assets were...

Question 14

Doug's Doodle Shop,specializing in dog supplies,signs a contract with a pet groomer.Next month,the groomer will begin leasing a portion of Doug's store and provide grooming services.The signing of the contract:

Accepted Answer

A) has no effect on the accounting equation. 
B) increases assets. 
C) increases liabilities. 
D) decreases stockholders' equity.

Question 15

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

Accepted Answer

A) True 
 B)False

Question 16

Puffin,Inc.issues $1,000,000 in new stock for cash.Puffin's stockholders' equity does not change because as new shares are sold,the value of its existing shares falls.

Accepted Answer

A) True 
 B)False

Question 17

Typical cash flows from investing activities include:

Accepted Answer

A) payments to purchase property and equipment. 
B) repayment of loans. 
C) proceeds from issuing notes payable. 
D) receipts from cash sales.

Question 18

When a company prepares a classified balance sheet,liability accounts must be shown in subcategories of current and noncurrent.

Accepted Answer

A) True 
 B)False

Question 19

The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. What is the total amount of current liabilities?

Accepted Answer

A) $324,770 
B) $2,029,813 
C) $385,960 
D) $399,770

Question 20

Every transaction involves a(n):

Accepted Answer

A) receiving and giving something of value. 
B) increase in assets. 
C) increase in stockholder's equity. 
D) exchange of promises.

Exam 2: The Balance Sheet

What will be the effect on the balance sheet of issuing shares of common stock in exchange for cash?

For each of the following,indicate how the event would most likely be categorized. -A company uses up supplies to manufacture a product.

The creditors' claims to a company's resources are represented by:

Who has first claim to a business's assets should the company go out of business?

Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year.During the year,assets decreased by $3,500 and liabilities increased by $2,800. What is the amount of the change in stockholders' equity during the year?

Listed below are components of several transactions.Indicate whether a debit (dr) or credit (cr) would be required to record the component of the transaction. -Decrease in Equipment.

T-accounts represent a simplified version of the:

Bolt Enterprises receives $100,000 cash from its customers on account.Bolt uses the cash to pay off $100,000 on a bank loan,the net result is that:

________ are of special importance because they are the only activities that enter the financial accounting system.

Which of the following statements about transaction analysis is not correct?

What is the effect on the balance sheet if a company purchases $100 of supplies using cash?

On January 1,Year 3,Wayfarer Co.'s assets were $240,000 and its stockholders' equity was $112,000.During the year,assets increased $12,000 and liabilities decreased $8,000. Required: Determine the amount of stockholders' equity at December 31,Year 3.

Doug's Doodle Shop,specializing in dog supplies,signs a contract with a pet groomer.Next month,the groomer will begin leasing a portion of Doug's store and provide grooming services.The signing of the contract:

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

Puffin,Inc.issues $1,000,000 in new stock for cash.Puffin's stockholders' equity does not change because as new shares are sold,the value of its existing shares falls.

Typical cash flows from investing activities include:

When a company prepares a classified balance sheet,liability accounts must be shown in subcategories of current and noncurrent.

The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. What is the total amount of current liabilities?

Every transaction involves a(n) :