Question 1

Conservatism means:

Accepted Answer

A)  not underestimating asset values. 
B)  not overestimating liabilities. 
C)  using the least optimistic measurement when faced with uncertainty about the reported amounts of assets and liabilities. 
D)  always recording an asset at the amount it originally cost. 
A)  not underestimating asset values. 
B)  not overestimating liabilities. 
C)  using the least optimistic measurement when faced with uncertainty about the reported amounts of assets and liabilities. 
D)  always recording an asset at the amount it originally cost.

Question 2

Your company pays back $2 million on a loan it had received earlier from a bank.

Accepted Answer

A)  Assets are unchanged, liabilities and stockholders' equity both increased by $2 million. 
B)  Assets decrease by $2 million, liabilities decrease by $2 million, stockholders' equity is unchanged. 
C)  Assets are unchanged, liabilities increase by $2 million, contributed capital decreases by $2 million. 
D)  Assets decrease by $2 million, liabilities are unchanged, contributed capital decreases by $2 million. 
A)  Assets are unchanged, liabilities and stockholders' equity both increased by $2 million. 
B)  Assets decrease by $2 million, liabilities decrease by $2 million, stockholders' equity is unchanged. 
C)  Assets are unchanged, liabilities increase by $2 million, contributed capital decreases by $2 million. 
D)  Assets decrease by $2 million, liabilities are unchanged, contributed capital decreases by $2 million.

Question 3

Stockholders' equity in a corporation consists of:

Accepted Answer

A)  Long-term assets. 
B)  Current assets plus long-term assets. 
C)  Assets plus liabilities. 
D)  Contributed capital plus retained earnings. 
A)  Long-term assets. 
B)  Current assets plus long-term assets. 
C)  Assets plus liabilities. 
D)  Contributed capital plus retained earnings.

Question 4

Which of the following would be listed as a long-term asset?

Accepted Answer

A)  Cash. 
B)  Supplies. 
C)  Buildings and equipment. 
D)  Total assets. 
A)  Cash. 
B)  Supplies. 
C)  Buildings and equipment. 
D)  Total assets.

Question 5

You are pleasantly surprised to discover that a popular actress appears on The Tonight Show wearing your company's jeans. Later, your company's sales increase by $500,000 as a result. When the actress appeared o n TV, you would have recorded an asset because the TV appearance was expected to bring future economic benefits to your company.

Accepted Answer

A) True 
 B)False

Question 6

What is the total amount of non-current assets?

Accepted Answer

A)  $493,590 
B)  $824,310 
C)  $649,540 
D)  $305,950 
A)  $493,590 
B)  $824,310 
C)  $649,540 
D)  $305,950

Question 7

A transaction can cause only one account on the balance sheet to change.

Accepted Answer

A) True 
 B)False

Question 8

A company issues $20 million in new stock. It later uses the cash received to pay off promissory notes. How many different accounts and which account names are affected by these two transactions?

Accepted Answer

A)  3 accounts involved: contributed capital, cash, and notes payable. 
B)  4 accounts involved: contributed capital, cash, liabilities, and accounts payable. 
C)  3 accounts involved: cash, assets, and accounts payable. 
D)  3 accounts involved: contributed capital, investments, and accounts payable. 
A)  3 accounts involved: contributed capital, cash, and notes payable. 
B)  4 accounts involved: contributed capital, cash, liabilities, and accounts payable. 
C)  3 accounts involved: cash, assets, and accounts payable. 
D)  3 accounts involved: contributed capital, investments, and accounts payable.

Question 9

Transactions are analyzed from the point of view of the company, not the company's owners.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A)  Assets must always equal liabilities plus stockholders' equity. 
B)  The total value of credits in all accounts must always equal the total value of debits in all accounts. 
C)  The net changes in assets must always equal the sum of the net changes in liabilities and stockholders' equity. 
D)  All of the above. 
A)  Assets must always equal liabilities plus stockholders' equity. 
B)  The total value of credits in all accounts must always equal the total value of debits in all accounts. 
C)  The net changes in assets must always equal the sum of the net changes in liabilities and stockholders' equity. 
D)  All of the above.

Question 11

In part, a transaction affects the accounting equation as follows:   Which of the following must be true for this transaction?

Accepted Answer

A)  If other assets are unchanged, stockholders' equity must be increasing. 
B)  If other assets are unchanged, stockholders' equity must be decreasing. 
C)  If stockholders' equity is unchanged, another asset must be decreasing. 
D)  If stockholders' equity is unchanged, other assets must be unchanged. 
A)  If other assets are unchanged, stockholders' equity must be increasing. 
B)  If other assets are unchanged, stockholders' equity must be decreasing. 
C)  If stockholders' equity is unchanged, another asset must be decreasing. 
D)  If stockholders' equity is unchanged, other assets must be unchanged.

Question 12

Which of the following would a company be most likely to overstate if the company was trying to mislead potential external investors or creditors?

Accepted Answer

A)  Accounts Receivable. 
B)  Notes Payable. 
C)  Salaries Expense. 
D)  Accounts Payable. 
A)  Accounts Receivable. 
B)  Notes Payable. 
C)  Salaries Expense. 
D)  Accounts Payable.

Question 13

What is the amount of the change in stockholders' equity in the year 2010?

Accepted Answer

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

Question 14

Which of the following is a TRUE statement?

Accepted Answer

A)  Conservatism requires accountants to intentionally understate assets. 
B)  Separate entity assumption in accounting requires that the financial activities of the owners of a company be reported on the company's balance sheet. 
C)  The cost principle states that recording activities at cost will result in the balance sheet representing the true value of the company. 
D)  A transaction is recorded in accounting if it has a measurable financial effect on the assets, liabilities or stockholders' equity of a business. 
A)  Conservatism requires accountants to intentionally understate assets. 
B)  Separate entity assumption in accounting requires that the financial activities of the owners of a company be reported on the company's balance sheet. 
C)  The cost principle states that recording activities at cost will result in the balance sheet representing the true value of the company. 
D)  A transaction is recorded in accounting if it has a measurable financial effect on the assets, liabilities or stockholders' equity of a business.

Question 15

Which of the following would not be recorded as an identifiable accounting transaction?

Accepted Answer

A)  Putting a deposit down on a new vehicle. 
B)  Hiring a new employee. 
C)  Obtaining a bank loan. 
D)  Receiving a deposit from a customer. 
A)  Putting a deposit down on a new vehicle. 
B)  Hiring a new employee. 
C)  Obtaining a bank loan. 
D)  Receiving a deposit from a customer.

Question 16

On January 1, Kirk Corporation had total assets of $850,000. During the month the following activities occurred: -. Kirk Corporation acquired equipment costing $6,000, promising to pay cash for it in 60 days.
-) Kirk Corporation purchased $3,500 of supplies for cash.
-) Kirk Corporation sold land which it had acquired 2 years ago. The land had cost $15,000 and it was sold for
$15,000 cash.
-) Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $1,000 per month.
-) The financial vice president of Kirk Corporation purchased a new vehicle for cash of $35,000. What is the amount of total assets of Kirk Corporation at the end of the month?

Accepted Answer

A)  $859,500 
B)  $856,000 
C)  $821,000 
D)  $806,000 
A)  $859,500 
B)  $856,000 
C)  $821,000 
D)  $806,000

Question 17

If Accounts Payable had a balance of $18,200 at the beginning of the month, and the six amounts shown below were posted to this account, what should be the ending balance? Three debits posted to Accounts Payable this month:$4,700, $11,300, and $14,800. Three credits posted to Accounts Payable this month:$3,600, $9,500, and $12,700.

Accepted Answer

A)  $13,200. 
B)  $5,000. 
C)  $23,200. 
D)  $49,000. 
A)  $13,200. 
B)  $5,000. 
C)  $23,200. 
D)  $49,000.

Question 18

Accounts receivable

Accepted Answer

A)  has a normal credit balance. 
B)  is increased by a debit. 
C)  is a liability. 
D)  is increased when a company receives cash from its customers. 
A)  has a normal credit balance. 
B)  is increased by a debit. 
C)  is a liability. 
D)  is increased when a company receives cash from its customers.

Question 19

Retained earnings is the cumulative earnings of a company which have not been distributed to owners.

Accepted Answer

A) True 
 B)False

Question 20

A company started the year with a normal balance of $68,000 in the Inventory account. During the year the following amounts were posted to the account: Debits of $45,000 and credits of $55,000. Choose the TRUE statement.

Accepted Answer

A)  After these amounts are posted, the balance in the Inventory account is a credit balance of $58,000. 
B)  The normal balance of the Inventory account is a credit balance. 
C)  The inventory account is decreased by debits. 
D)  The debits and credits posted to the Inventory account caused it to decrease by $10,000. 
A)  After these amounts are posted, the balance in the Inventory account is a credit balance of $58,000. 
B)  The normal balance of the Inventory account is a credit balance. 
C)  The inventory account is decreased by debits. 
D)  The debits and credits posted to the Inventory account caused it to decrease by $10,000.

Conservatism means:

Your company pays back $2 million on a loan it had received earlier from a bank.

Stockholders' equity in a corporation consists of:

Which of the following would be listed as a long-term asset?

What is the total amount of non-current assets?

A transaction can cause only one account on the balance sheet to change.

A company issues $20 million in new stock. It later uses the cash received to pay off promissory notes. How many different accounts and which account names are affected by these two transactions?

Transactions are analyzed from the point of view of the company, not the company's owners.

Which of the following statements is true?

In part, a transaction affects the accounting equation as follows: Which of the following must be true for this transaction?

Which of the following would a company be most likely to overstate if the company was trying to mislead potential external investors or creditors?

What is the amount of the change in stockholders' equity in the year 2010?

Which of the following is a TRUE statement?

Which of the following would not be recorded as an identifiable accounting transaction?

Accounts receivable

Retained earnings is the cumulative earnings of a company which have not been distributed to owners.

A company started the year with a normal balance of $68,000 in the Inventory account. During the year the following amounts were posted to the account: Debits of $45,000 and credits of $55,000. Choose the TRUE statement.

Business Decisions and Financial Accounting

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

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

Conservatism means:

Your company pays back $2 million on a loan it had received earlier from a bank.

Stockholders' equity in a corporation consists of:

Which of the following would be listed as a long-term asset?

What is the total amount of non-current assets?

A transaction can cause only one account on the balance sheet to change.

A company issues $20 million in new stock. It later uses the cash received to pay off promissory notes. How many different accounts and which account names are affected by these two transactions?

Transactions are analyzed from the point of view of the company, not the company's owners.

Which of the following statements is true?

In part, a transaction affects the accounting equation as follows: Which of the following must be true for this transaction?

Which of the following would a company be most likely to overstate if the company was trying to mislead potential external investors or creditors?

What is the amount of the change in stockholders' equity in the year 2010?

Which of the following is a TRUE statement?

Which of the following would not be recorded as an identifiable accounting transaction?

Accounts receivable

Retained earnings is the cumulative earnings of a company which have not been distributed to owners.

A company started the year with a normal balance of $68,000 in the Inventory account. During the year the following amounts were posted to the account: Debits of $45,000 and credits of $55,000. Choose the TRUE statement.

Business Decisions and Financial Accounting

Reporting Operating Results on the Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control and Financial Reporting for Cash and Merchandise Sales

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue

Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters