Question 1

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

Accepted Answer

The company may pay

Question 2

The income statement for August indicates net income of $100,000.The corporation also paid $25,000 in dividends during the same period.If the company is in operation for only one month and has no beginning balance in retained earnings,what is the ending balance in retained earnings?

Accepted Answer

A) $75,000 
B) $100,000 
C) $20,000 
D) $125,000 
A) $75,000 
B) $100,000 
C) $20,000 
D) $125,000

Question 3

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

Accepted Answer

A) Assets and stockholders' equity 
B) Assets and liabilities 
C) Liabilities and stockholders' equity 
D) None of these 
A) Assets and stockholders' equity 
B) Assets and liabilities 
C) Liabilities and stockholders' equity 
D) None of these

Question 4

If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:

Accepted Answer

A) $140,000. 
B) $60,000. 
C) $80,000. 
D) $20,000. 
A) $140,000. 
B) $60,000. 
C) $80,000. 
D) $20,000.

Question 5

Miscellaneous expenses are expenses that have an undetermined amount to be paid.

Accepted Answer

A) True 
 B)False

Question 6

A to Z Corporation purchased a building for $80,000 cash.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. 
A) Cash Flows from Operating Activities. 
B) Cash Flows from Investing Activities. 
C) Cash Flows from Financing Activities. 
D) Noncash transaction.

Question 7

Which of the following is not an element of the financial accounting system?

Accepted Answer

A) Rules for determining what,when and the amount that should be recorded 
B) A framework for preparing financial statements 
C) A set of rules for the stock exchange 
D) Controls to determine whether errors occur during recording 
A) Rules for determining what,when and the amount that should be recorded 
B) A framework for preparing financial statements 
C) A set of rules for the stock exchange 
D) Controls to determine whether errors occur during recording

Question 8

Sunlight,Inc.had the following assets and liabilities as of September 30,2016:

Accepted Answer

A) $0 
B) $33,100 
C) $88,100 
D) Cannot be determined with this information 
A) $0 
B) $33,100 
C) $88,100 
D) Cannot be determined with this information

Question 9

For EFG Co.,the transaction "receipt of interest income" would:

Accepted Answer

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

Question 10

For EFG Co.,the transaction "payment of dividends" would:

Accepted Answer

A) increase total assets. 
B) decrease total assets. 
C) have no effect on total assets. 
D) increase stockholders' equity. 
A) increase total assets. 
B) decrease total assets. 
C) have no effect on total assets. 
D) increase stockholders' equity.

Question 11

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.

Accepted Answer

Yes to both questions.Examples

Question 12

Johnson,Inc.receives $5,000 cash for fees earned.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) Retained earnings will remain unchanged. 
A) Total assets remain unchanged. 
B) Cash flow from Financing Activities will increase. 
C) Net income will increase. 
D) Retained earnings will remain unchanged.

Question 13

Sunlight,Inc.had the following assets and liabilities as of September 30,2016

Accepted Answer

A) ($1,450) 
B) $1,450 
C) $7,250 
D) ($7,250) 
A) ($1,450) 
B) $1,450 
C) $7,250 
D) ($7,250)

Question 14

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Accepted Answer

A) True 
 B)False

Question 15

The following are included in Ace Auto Parts,Inc.'s December 31,2015 balance sheet:

Accepted Answer

Assets = Liabilities + Stockholder's Equ

Question 16

Johnson,Inc.purchased land for cash.What effect does this transaction have?

Accepted Answer

A) Increase in Cash and decrease in Land 
B) Decrease in Cash and decrease in Land 
C) Increase in Cash and increase in Land 
D) Decrease in Cash and increase in Land 
A) Increase in Cash and decrease in Land 
B) Decrease in Cash and decrease in Land 
C) Increase in Cash and increase in Land 
D) Decrease in Cash and increase in Land

Question 17

Paying expenses affects which financial statement elements?

Accepted Answer

A) Assets only 
B) Stockholders' equity only 
C) Assets and stockholders' equity 
D) Assets and liabilities 
A) Assets only 
B) Stockholders' equity only 
C) Assets and stockholders' equity 
D) Assets and liabilities

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

For EFG Co.,the transaction "receipt of a utility bill" would:

Accepted Answer

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

Question 20

Rush Corporation borrowed $25,000 from the bank.Which of the following accurately shows the effects of the transaction?

Accepted Answer

A) Increase cash $25,000 and decrease notes payable $25,000 
B) Increase cash $25,000 and increase notes payable $25,000 
C) Decrease cash $25,000 and decrease notes payable $25,000 
D) Decrease cash $25,000 and increase notes payable $25,000 
A) Increase cash $25,000 and decrease notes payable $25,000 
B) Increase cash $25,000 and increase notes payable $25,000 
C) Decrease cash $25,000 and decrease notes payable $25,000 
D) Decrease cash $25,000 and increase notes payable $25,000

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

The income statement for August indicates net income of $100,000.The corporation also paid $25,000 in dividends during the same period.If the company is in operation for only one month and has no beginning balance in retained earnings,what is the ending balance in retained earnings?

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:

Miscellaneous expenses are expenses that have an undetermined amount to be paid.

A to Z Corporation purchased a building for $80,000 cash.On the Statement of Cash Flows,the transaction would be classified as:

Which of the following is not an element of the financial accounting system?

Sunlight,Inc.had the following assets and liabilities as of September 30,2016:

For EFG Co.,the transaction "receipt of interest income" would:

For EFG Co.,the transaction "payment of dividends" would:

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.

Johnson,Inc.receives $5,000 cash for fees earned.What is the effect of this transaction?

Sunlight,Inc.had the following assets and liabilities as of September 30,2016

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

The following are included in Ace Auto Parts,Inc.'s December 31,2015 balance sheet:

Johnson,Inc.purchased land for cash.What effect does this transaction have?

Paying expenses affects which financial statement elements?

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

For EFG Co.,the transaction "receipt of a utility bill" would:

Rush Corporation borrowed $25,000 from the bank.Which of the following accurately shows the effects of the transaction?

The Role of Accounting in Business

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 2: Basic Accounting Concepts

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

The income statement for August indicates net income of $100,000.The corporation also paid $25,000 in dividends during the same period.If the company is in operation for only one month and has no beginning balance in retained earnings,what is the ending balance in retained earnings?

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:

Miscellaneous expenses are expenses that have an undetermined amount to be paid.

A to Z Corporation purchased a building for $80,000 cash.On the Statement of Cash Flows,the transaction would be classified as:

Which of the following is not an element of the financial accounting system?

Sunlight,Inc.had the following assets and liabilities as of September 30,2016:

For EFG Co.,the transaction "receipt of interest income" would:

For EFG Co.,the transaction "payment of dividends" would:

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.

Johnson,Inc.receives $5,000 cash for fees earned.What is the effect of this transaction?

Sunlight,Inc.had the following assets and liabilities as of September 30,2016

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

The following are included in Ace Auto Parts,Inc.'s December 31,2015 balance sheet:

Johnson,Inc.purchased land for cash.What effect does this transaction have?

Paying expenses affects which financial statement elements?

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

For EFG Co.,the transaction "receipt of a utility bill" would:

Rush Corporation borrowed $25,000 from the bank.Which of the following accurately shows the effects of the transaction?

The Role of Accounting in Business

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Cost Systems

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters