Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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. 
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 4

Equality of the accounting equation means that no errors have occurred.

Accepted Answer

A) True 
 B)False

Question 5

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. Example

Question 6

The statement of cash flows is integrated with the balance sheet because:

Accepted Answer

A)  the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. 
B)  the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. 
C)  the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. 
D)  the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet. 
A)  the cash at the beginning of the period plus or minus the cash flows from operating, investing, and financing activities equals the end of period cash reported on the balance sheet. 
B)  the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet. 
C)  the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet. 
D)  the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.

Question 7

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

Question 8

Part A
Indicate the effect of each transaction during the month of October 2013 and the balances for the accounting equation after all transactions have been recorded. No beginning balances exist in the accounts. An accounting equation has been provided.
 a.Opened a business bank account for Jones, Inc., with an initial deposit of $ \$ 45,000 $ in exchange for capital stock.
b.  Paid rent on the office building for the month $ \$ 2,000 $.
c.Received cash for fees earned of $ \$ 5,000 $.
d.Purchased equipment, $ \$ 7,000 $.
e.Borrowed $ \$ 20,000 $ by issuing \& note payable.
f.Paid salaries for the monith, $ \$ 1,000 $.
g.Received cash for fees earned of $ \$ 8,000 $.
h. Paid dividends, $ \$ 3,000 $.
i. Paid interest on the note, $ \$ 100 $.   Part B
Using the information from Part A, prepare (1) an income statement, (2) a statement of retained earnings, (3) a balance sheet, and (4) a statement of cash flows for the month of October.

Accepted Answer

None

Question 9

For EFG Co., the transaction "payment to creditors" would:

Accepted Answer

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

Question 10

BNC Company earns revenues and as a result collects cash. Which of the following financial statement elements increased?

Accepted Answer

A)  Cash only 
B)  Stockholders' equity only 
C)  Liabilities 
D)  Cash and stockholders' equity 
A)  Cash only 
B)  Stockholders' equity only 
C)  Liabilities 
D)  Cash and stockholders' equity

Question 11

Exhibit 2-1 $\begin{array}{lll}
\text { Total Liabilities } & \text { Total Assets } & \
\$ 60,000 & \$ 100,000 & \text { Beginning of the year } \
\$ 325,000 & \$ 500,000 & \text { End of the year }
\end{array}$

Refer to Exhibit 2-1. What is net income, assuming $50,000 of stock was issued and no dividends were paid?

Accepted Answer

A)  $110,000 
B)  $85,000 
C)  $70,000 
D)  $200,000 
A)  $110,000 
B)  $85,000 
C)  $70,000 
D)  $200,000

Question 12

It is possible for a transaction to change the makeup of assets, but to not affect assets in total.

Accepted Answer

A) True 
 B)False

Question 13

When capital stock is issued by a corporation for cash, both the income statement and the balance sheet are affected.

Accepted Answer

A) True 
 B)False

Question 14

Stockholders' Equity will be reduced by all of the following accounts except:

Accepted Answer

A)  revenues 
B)  expenses 
C)  dividends 
D)  all of the above reduce Stockholders' Equity. 
A)  revenues 
B)  expenses 
C)  dividends 
D)  all of the above reduce Stockholders' Equity.

Question 15

For EFG Co., the transaction "payment of interest expense" 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 16

Flow, Inc. received cash from fees earned. How does this transaction affect the Statement of Cash Flows?

Accepted Answer

A)  Increase cash from Operating Activities 
B)  Increase cash from Investing Activities 
C)  Increase cash from Financing Activities 
D)  No effect on the Statement of Cash Flows 
A)  Increase cash from Operating Activities 
B)  Increase cash from Investing Activities 
C)  Increase cash from Financing Activities 
D)  No effect on the Statement of Cash Flows

Question 17

A _____ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

Accepted Answer

A)  framework 
B)  control 
C)  set of rules 
D)  transaction 
A)  framework 
B)  control 
C)  set of rules 
D)  transaction

Question 18

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

Accepted Answer

A) True 
 B)False

Question 19

Expenses can be defined as:

Accepted Answer

A)  assets consumed. 
B)  services used in the process of generating revenues. 
C)  costs that have been incurred during the normal course of business. 
D)  all of these. 
A)  assets consumed. 
B)  services used in the process of generating revenues. 
C)  costs that have been incurred during the normal course of business. 
D)  all of these.

Question 20

Exhibit 2-1 $\begin{array}{lll}
\text { Total Liabilities } & \text { Total Assets } & \
\$ 60,000 & \$ 100,000 & \text { Beginning of the year } \
\$ 325,000 & \$ 500,000 & \text { End of the year }
\end{array}$
 Refer to Exhibit 2-1. What is net income, assuming no stock was issued and no dividends were paid?

Accepted Answer

A)  $215,000 
B)  $175,000 
C)  $135,000 
D)  $40,000 
A)  $215,000 
B)  $175,000 
C)  $135,000 
D)  $40,000

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

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.

Which of the following situations increase stockholders' equity?

Equality of the accounting equation means that no errors have occurred.

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.

The statement of cash flows is integrated with the balance sheet because:

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

For EFG Co., the transaction "payment to creditors" would:

BNC Company earns revenues and as a result collects cash. Which of the following financial statement elements increased?

Exhibit 2-1 Total Liabilities Total Assets \ 60,000 \ 100,000 Beginning of the year \ 325,000 \ 500,000 End of the year Refer to Exhibit 2-1. What is net income, assuming $50,000 of stock was issued and no dividends were paid?

It is possible for a transaction to change the makeup of assets, but to not affect assets in total.

When capital stock is issued by a corporation for cash, both the income statement and the balance sheet are affected.

Stockholders' Equity will be reduced by all of the following accounts except:

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

Flow, Inc. received cash from fees earned. How does this transaction affect the Statement of Cash Flows?

A _____ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

Expenses can be defined as:

Exhibit 2-1 Total Liabilities Total Assets \ 60,000 \ 100,000 Beginning of the year \ 325,000 \ 500,000 End of the year Refer to Exhibit 2-1. What is net income, assuming no stock was issued and no dividends were paid?

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

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Exam 2: Basic Accounting Concepts

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

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.

Which of the following situations increase stockholders' equity?

Equality of the accounting equation means that no errors have occurred.

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.

The statement of cash flows is integrated with the balance sheet because:

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

For EFG Co., the transaction "payment to creditors" would:

BNC Company earns revenues and as a result collects cash. Which of the following financial statement elements increased?

Exhibit 2-1 Total Liabilities Total Assets \ 60,000 \ 100,000 Beginning of the year \ 325,000 \ 500,000 End of the year Refer to Exhibit 2-1. What is net income, assuming $50,000 of stock was issued and no dividends were paid?

It is possible for a transaction to change the makeup of assets, but to not affect assets in total.

When capital stock is issued by a corporation for cash, both the income statement and the balance sheet are affected.

Stockholders' Equity will be reduced by all of the following accounts except:

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

Flow, Inc. received cash from fees earned. How does this transaction affect the Statement of Cash Flows?

A _____ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

When a notes payable account is paid in cash, the stockholders' equity in the business increases.

Expenses can be defined as:

Exhibit 2-1 Total Liabilities Total Assets \ 60,000 \ 100,000 Beginning of the year \ 325,000 \ 500,000 End of the year Refer to Exhibit 2-1. What is net income, assuming no stock was issued and no dividends were paid?

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

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