Question 1

A business is obliged to repay both debt and equity financing.

Accepted Answer

A) True 
 B)False

Question 2

If total assets increase,then either total liabilities or total stockholders' equity must also increase.

Accepted Answer

A) True 
 B)False

Question 3

T-accounts represent a simplified version of the:

Accepted Answer

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

Question 4

Which of the following would be treated as an accounting transaction for a gardening supply store?

Accepted Answer

A)   The company signed an agreement to rent store space at $200 month.
B)   The vice president of the company spoke at a luncheon that contributed to enhancing the company's reputation as a responsible company.
C)   The company ordered supplies for $500.
D)   The company loaned $500 to an employee.E) None of the above
F) A) and C)

Question 5

On January 1,Year 3,New Works,Inc.'s assets were $300,000 and its stockholders' equity was $140,000.During the year,assets increased $15,000 and liabilities decreased $10,000.
Required:
Determine the amount of stockholders' equity at December 31,Year 3.

Accepted Answer

Beginning of the year:
Assets = Liabilit...

Question 6

-Use the information above to answer the following question.What is the total of the credit balance accounts?

Accepted Answer

A)   $111,040.
B)   $104,090.
C)   $113,540.
D)   $108,590.E) A) and D)
F) A) and C)

Question 7

When accounts receivable are collected:

Accepted Answer

A)   stockholders' equity increases.
B)   total assets increase.
C)   total assets decrease.
D)   the amount of total assets is unchanged.E) A) and B)
F) A) and C)

Question 8

A company was formed with $60,000 cash contributed by its owners in exchange for common stock.The company borrowed $30,000 from a bank.The company purchased $10,000 of inventory and paid cash for it.The company also purchased $70,000 of equipment by paying $10,000 in cash and issuing a note for the remainder.
-Use the information above to answer the following question.What is the amount of the total assets to be reported on the balance sheet?

Accepted Answer

A)   $150,000.
B)   $160,000.
C)   $90,000.
D)   $80,000.E) A) and B)
F) A) and C)

Question 9

A ledger is used to:

Accepted Answer

A)   show increases and decreases in individual accounts, as well as ending balance.
B)   report the results of operations to stockholders, creditors, and managers.
C)   prove that debits equal credits.
D)   make a balance sheet unnecessary.E) A) and B)
F) B) and D) A

Question 10

A company was formed with $60,000 cash contributed by its owners in exchange for common stock.The company borrowed $30,000 from a bank.The company purchased $10,000 of inventory and paid cash for it.The company also purchased $70,000 of equipment by paying $10,000 in cash and issuing a note for the remainder.
-Use the information above to answer the following question.What is the amount of the total liabilities to be reported on the balance sheet?

Accepted Answer

A)   $60,000.
B)   $0
C)   $90,000.
D)   $80,000.E) B) and C)
F) All of the above

Question 11

The normal balance of an account is on the same side that increases the account.

Accepted Answer

A) True 
 B)False

Question 12

Sofa So Good,Inc.signs a contract with a programmer for the development of software that will be developed,delivered and paid for in the next year.The signing of the contract:

Accepted Answer

A)   has no effect on the account equation.
B)   increases assets.
C)   increases liabilities.
D)   decreases stockholder's equity.E) None of the above
F) B) and C)

Question 13

The classified balance sheet for a company reported current assets of $1,623,850, total liabilities of $799,540, Common Stock of $1,000,000, and Retained Earnings of $130,260.The current ratio was 2.5.
-Use the information above to answer the following question.What is the total amount of noncurrent assets?

Accepted Answer

A)   $493,590.
B)   $824,310.
C)   $649,540.
D)   $305,950.E) A) and B)
F) All of the above

Question 14

In April,Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of May.In April,Pizza Aroma should record:

Accepted Answer

A)   nothing, because an exchange of promises is not a transaction.
B)   a $1,000 increase to Prepaid wages and a $1,000 decrease to Cash.
C)   a $1,000 increase to Wage expense and a $1,000 decrease to Cash.
D)   a $1,000 increase in Wages Payable and a $1,000 increase in Wages Expense.E) C) and D)
F) B) and D)

Question 15

Every transaction:

Accepted Answer

A)   increases one account and decreases another account.
B)   has at least two effects on the basic accounting equation.
C)   affects only balance sheet accounts or only income statement accounts.
D)   is analyzed from the standpoint of the business owners.E) A) and B)
F) A) and C)

Question 16

Which events are recorded in the accounting system?

Accepted Answer

A)   External exchanges only
B)   Internal events only
C)   Both external exchanges and internal events
D)   Transactions are not recorded in the accounting systemE) All of the above
F) A) and D)

Question 17

If the total dollar value of credits to an account exceeds the total dollar value of debits to that account,the ending balance of the account will be a debit balance.

Accepted Answer

A) True 
 B)False

Question 18

Typical steps needed before a business can start selling goods and/or services to customers include:

Accepted Answer

A)   financing and investing activities.
B)   only financing activities.
C)   only investing activities.
D)   only operating activities.E) A) and B)
F) A) and C) A

Question 19

Company X issues $40 million in new stock for cash.This does not affect stockholders' equity because as new shares are sold,the value of existing shares falls.

Accepted Answer

A) True 
 B)False

Question 20

-Use the information above to answer the following question.What is the amount of Total Assets on the balance sheet?

Accepted Answer

A)   $240,116.
B)   $214,300.
C)   $442,924.
D)   $480,232.E) C) and D)
F) All of the above A

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

A business is obliged to repay both debt and equity financing.

Correct Answer
verified

If total assets increase,then either total liabilities or total stockholders' equity must also increase.

Correct Answer
verified

T-accounts represent a simplified version of the:

Correct Answer
verified

Which of the following would be treated as an accounting transaction for a gardening supply store?

Correct Answer
verified

On January 1,Year 3,New Works,Inc.'s assets were $300,000 and its stockholders' equity was $140,000.During the year,assets increased $15,000 and liabilities decreased $10,000. Required: Determine the amount of stockholders' equity at December 31,Year 3.

Correct Answer
verified
Beginning of the year:
Assets = Liabilit...
View Answer

-Use the information above to answer the following question.What is the total of the credit balance accounts?

Correct Answer
verified

When accounts receivable are collected:

Correct Answer
verified

Correct Answer
verified

A ledger is used to:

Correct Answer
verified
A

Correct Answer
verified

The normal balance of an account is on the same side that increases the account.

Correct Answer
verified

Sofa So Good,Inc.signs a contract with a programmer for the development of software that will be developed,delivered and paid for in the next year.The signing of the contract:

Correct Answer
verified

Correct Answer
verified

In April,Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of May.In April,Pizza Aroma should record:

Correct Answer
verified

Every transaction:

Correct Answer
verified

Which events are recorded in the accounting system?

Correct Answer
verified

If the total dollar value of credits to an account exceeds the total dollar value of debits to that account,the ending balance of the account will be a debit balance.

Correct Answer
verified

Typical steps needed before a business can start selling goods and/or services to customers include:

Correct Answer
verified
A

Company X issues $40 million in new stock for cash.This does not affect stockholders' equity because as new shares are sold,the value of existing shares falls.

Correct Answer
verified

-Use the information above to answer the following question.What is the amount of Total Assets on the balance sheet?

Correct Answer
verified
A

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

A business is obliged to repay both debt and equity financing.

Correct AnswerverifiedShow Answer

If total assets increase,then either total liabilities or total stockholders' equity must also increase.

Correct AnswerverifiedShow Answer

T-accounts represent a simplified version of the:

Correct AnswerverifiedShow Answer

Which of the following would be treated as an accounting transaction for a gardening supply store?

Correct AnswerverifiedShow Answer

On January 1,Year 3,New Works,Inc.'s assets were $300,000 and its stockholders' equity was $140,000.During the year,assets increased $15,000 and liabilities decreased $10,000. Required: Determine the amount of stockholders' equity at December 31,Year 3.

Correct AnswerverifiedBeginning of the year:Assets = Liabilit...View AnswerShow Answer

-Use the information above to answer the following question.What is the total of the credit balance accounts?

Correct AnswerverifiedShow Answer

When accounts receivable are collected:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A ledger is used to:

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

The normal balance of an account is on the same side that increases the account.

Correct AnswerverifiedShow Answer

Sofa So Good,Inc.signs a contract with a programmer for the development of software that will be developed,delivered and paid for in the next year.The signing of the contract:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In April,Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of May.In April,Pizza Aroma should record:

Correct AnswerverifiedShow Answer

Every transaction:

Correct AnswerverifiedShow Answer

Which events are recorded in the accounting system?

Correct AnswerverifiedShow Answer

If the total dollar value of credits to an account exceeds the total dollar value of debits to that account,the ending balance of the account will be a debit balance.

Correct AnswerverifiedShow Answer

Typical steps needed before a business can start selling goods and/or services to customers include:

Correct AnswerverifiedA

Company X issues $40 million in new stock for cash.This does not affect stockholders' equity because as new shares are sold,the value of existing shares falls.

Correct AnswerverifiedShow Answer

-Use the information above to answer the following question.What is the amount of Total Assets on the balance sheet?

Correct AnswerverifiedA

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Beginning of the year:
Assets = Liabilit...
View Answer

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A

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