Question 1

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Accepted Answer

A)  net income amounted to $350. 
B)  total assets increased by $250. 
C)  cash inflow from operating activities was $350. 
D)  all of these are correct. 
A)  net income amounted to $350. 
B)  total assets increased by $250. 
C)  cash inflow from operating activities was $350. 
D)  all of these are correct. D

Question 2

Which of the following statements is true?

Accepted Answer

A)  Balance sheet accounts are referred to as nominal accounts. 
B)  Balance sheet accounts are referred to as permanent accounts. 
C)  Dividends are permanent accounts. 
D)  All of these statements are true. 
A)  Balance sheet accounts are referred to as nominal accounts. 
B)  Balance sheet accounts are referred to as permanent accounts. 
C)  Dividends are permanent accounts. 
D)  All of these statements are true. B

Question 3

Use the following information to prepare an income statement for Grandin Company for the period ending December 31, 2012. All transactions were for cash.
A) Received revenue from services provided to customers, $28,500.
B) Paid $19,000 cash for land.
C) Paid operating expenses, $19,400.
D) Paid dividends to stockholders, $3,200.
E) Issued $16,000 of common stock.

Accepted Answer

Explanation: Only revenue and expenses are reported on the income statement. Purchasing land, paying dividends, and issuing common stock do not affect the income statement.

Question 4

Vantage Corporation invested $800 cash in Tandem Company stock.
Which of the following could describe the effects of an asset source transaction on a company's financial statements? $$\begin{array} { | l | l | l | l | l | l | l | } 
\hline \text { Assets } = & \text { Liab. } + & \text { Equity } & \text { Rev. } - & \text { Exp. } = & \text { Net Inc. } & \text { Cash Flow } \
\hline
\end{array}$$

Accepted Answer

A) 
$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline + & + & \text { NA } & \text { NA } & \text { NA } & \text { NA } & + \text { FA } \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | l | l | l |} 
\hline + & \mathrm { NA } & + & \mathrm { NA } & \mathrm { NA } & \mathrm { NA } & + \mathrm { FA } \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | l | l | l |} 
\hline + & \mathrm { NA } & + &+& \mathrm { NA } &+ & + \mathrm { OA } \
\hline
\end{array}$$ 
D) 
$$\text { All of these }$$ 
A) 
$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline + & + & \text { NA } & \text { NA } & \text { NA } & \text { NA } & + \text { FA } \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | l | l | l | l | l | l |} 
\hline + & \mathrm { NA } & + & \mathrm { NA } & \mathrm { NA } & \mathrm { NA } & + \mathrm { FA } \
\hline
\end{array}$$ 
C) 
$$\begin{array} { | l | l | l | l | l | l | l |} 
\hline + & \mathrm { NA } & + &+& \mathrm { NA } &+ & + \mathrm { OA } \
\hline
\end{array}$$ 
D) 
$$\text { All of these }$$

Question 5

Dover Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Assets } \
-
\end{array} & = & \begin{array} { c } 
\text { Liab. } \
\text { NA }
\end{array} & + & \text { Equity } & \begin{array} { c } 
\text { Rev } \
\text { NA }
\end{array} & - & \begin{array} { c } 
\text { Exp } \
+
\end{array} & = & \begin{array} { c } 
\text { Net } \
\text { Inc. } \
-
\end{array} & \begin{array} { c } 
\text { Cash } \
\text { Flow } \
\text {-OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Dover's statements?

Accepted Answer

A)  Paid a cash dividend. 
B)  Earned cash revenue. 
C)  Borrowed money from a bank. 
D)  Incurred a cash expense. 
A)  Paid a cash dividend. 
B)  Earned cash revenue. 
C)  Borrowed money from a bank. 
D)  Incurred a cash expense.

Question 6

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements? $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l |} 
\hline \text { Assets } & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } & \text { Cash Flow } \
\hline
\end{array}$$

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
$$\text { None of these could represent the effects of an asset exchange transaction. }$$ 
A) 
  
B) 
  
C) 
  
D) 
$$\text { None of these could represent the effects of an asset exchange transaction. }$$

Question 7

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Accepted Answer

A)  net income amounted to $350. 
B)  total assets increased by $250. 
C)  cash inflow from operating activities was $350. 
D)  all of these are correct. 
A)  net income amounted to $350. 
B)  total assets increased by $250. 
C)  cash inflow from operating activities was $350. 
D)  all of these are correct.

Question 8

Richardson Company paid $850 cash for rent expense. As a result of this business event,

Accepted Answer

A)  Total assets decreased. 
B)  Liabilities decreased. 
C)  The net cash flow from operating activities decreased. 
D)  Total assets decreased and the net cash flow from operating activities decreased are correct. 
A)  Total assets decreased. 
B)  Liabilities decreased. 
C)  The net cash flow from operating activities decreased. 
D)  Total assets decreased and the net cash flow from operating activities decreased are correct.

Question 9

Which of the following statements regarding cash transactions is true?

Accepted Answer

A)  Purchasing land for cash results in no net change in assets. 
B)  Issuance of stock to owners increases assets. 
C)  Expense transactions increase assets. 
D)  Purchasing land for cash results in no net change in assets and Issuance of stock to owners increases assets. 
A)  Purchasing land for cash results in no net change in assets. 
B)  Issuance of stock to owners increases assets. 
C)  Expense transactions increase assets. 
D)  Purchasing land for cash results in no net change in assets and Issuance of stock to owners increases assets.

Question 10

The following events are for Leisure Travel Services for the year 2013, the first year of operations. Assume that all transactions involve the receipt or payment of cash.
1) The business acquired $40,000 from stock issued to owners.
2) Creditors loaned the company $17,500.
3) The company provided services to its customers and received $55,400.
4) The company paid expenses amounting to $43,250.
5) The company purchased land for $29,000.
6) The company paid a dividend of $5,000 to its owners.
Required:
a) Show the effects of the above transactions on the accounting equation (use appropriate element and account headings). For those events that affect retained earnings, indicate in a separate column the appropriate temporary account. Accounting Equation:
Event No.
1)
2)
3)
4)
5)
6)
Totals 
b) Prepare an income statement and balance sheet for the year 2013.

Accepted Answer

a) @#IMG-DLM& b) @#IMG-DLM& Leisure Travel Services
Income S

Question 11

Classify each of the following events as an asset source (AS), asset use (AU), asset exchange (AX), or not applicable (NA).
_______ 1) Borrowed cash from the bank.
_______ 2) Issued stock for cash.
_______ 3) Invested cash in the common stock of another company.
_______ 4) Paid cash for operating expense.
_______ 5) Performed services and collected cash.
_______ 6) Purchased equipment for cash.
_______ 7) Repaid the bank loan with cash.
_______ 8) Dividends paid to the stockholders.

Accepted Answer

1) AS 2) A

Question 12

Which of the following could represent the effects of an asset source transaction on a company's financial statements? $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l| } 
\hline \text { Assets } & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } & \text { Cash Flow } \
\hline
\end{array}$$

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

Question 13

Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. $\text { Increase }=I \quad \text { Decrease }=D \quad \text { No Effect }=N$ 
Ferguson Co. issued common stock for $50,000 cash. $\begin{array} { l  }\begin{array}{|l|l|l|l|l|l|l|}
\text { Assets }&\text {Liabilities}&\text { Equity }&\text {Revenues }&\text {Expenses }&\text { Net Income }&\text { Cash }\

\hline & & & & & & \
\hline
\end{array}
\end{array}$

Accepted Answer

(I) (N) (I) (N) (N) (N) (I)
Explanation:

Question 14

Dover Company experienced an accounting event that affected its financial statements as indicated below: $$\begin{array} { | c | c | c | c | c | c | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Assets } \
-
\end{array} & = & \begin{array} { c } 
\text { Liab. } \
\text { NA }
\end{array} & + & \text { Equity } & \begin{array} { c } 
\text { Rev } \
\text { NA }
\end{array} & - & \begin{array} { c } 
\text { Exp } \
+
\end{array} & = & \begin{array} { c } 
\text { Net } \
\text { Inc. } \
-
\end{array} & \begin{array} { c } 
\text { Cash } \
\text { Flow } \
\text {-OA }
\end{array} \
\hline
\end{array}$$ Which of the following accounting events could have caused these effects on Dover's statements?

Accepted Answer

A)  Paid a cash dividend. 
B)  Earned cash revenue. 
C)  Borrowed money from a bank. 
D)  Incurred a cash expense. 
A)  Paid a cash dividend. 
B)  Earned cash revenue. 
C)  Borrowed money from a bank. 
D)  Incurred a cash expense.

Question 15

During 2013, Wynona Company issued common stock to stockholders for $12,000, purchased land for $3,200 cash, and paid cash dividends of $1,000 to the company's owners. Enter each of these three events into the horizontal financial statements model, below. Indicate dollar amounts of increases and decreases. For cash flows, show whether they are operating activities (OA), investing activities (IA), or financing activities (FA).

Accepted Answer

The answer of During 2013, Wynona Company issued common stock...

Question 16

On January 1, 2013, Baird Company had beginning balances as lows:
Assets = $2,250
Liabilities = $620
Common Stock = $800
During 2013, Baird paid dividends to its stockholders of $900. Given that ending retained earnings was $600, what was Baird's net income for the 2013 accounting period?

Accepted Answer

A)  $770 
B)  $830 
C)  $1,250 
D)  $500 
A)  $770 
B)  $830 
C)  $1,250 
D)  $500

Question 17

Indicate whether each of the following statements about markets is true or false.
_______ a) Financial resources can be provided to a business by investors and creditors.
_______ b) Conversion agents are the businesses that transform resources into products that satisfy consumer desires.
_______ c) Physical resources include the labor of the production workers.
_______ d) Resource owners purchase their resources from conversion agents.
_______ e) Consumers are the main providers of resources in any market.

Accepted Answer

a) True b) True c) False d) False e) Fal

Question 18

Indicate whether each of the following statements about liabilities is true or false.
_______ a) A net loss on the income statement decreases liabilities.
_______ b) The acquisition of a bank loan increases both assets and liabilities.
_______ c) The accounting equation requires that liabilities be equal to equity.
_______ d) The amount of a company's liabilities is equal to (assets - equity).
_______ e) Liabilities are reported on the statement of cash flows of a business.

Accepted Answer

a) False b) True c) False d) True e) Fal

Question 19

La Paz Company engaged in the following transactions during 2012, its first year in operation: (Assume all transactions are cash transactions)
1) Acquired $3,000 cash from issuing common stock.
2) Borrowed $2,200 from a bank.
3) Earned $3,100 of revenues.
4) Incurred $2,400 in expenses.
5) Paid dividends of $400.
La Paz Company engaged in the following transactions during 2013:
1) Acquired an additional $500 cash from the issue of common stock.
2) Repaid $1,300 of its debt to the bank.
3) Earned revenues, $4,500.
4) Incurred expenses of $2,750.
5) Paid dividends of $640.
The amount of retained earnings on La Paz's 2012 balance sheet was

Accepted Answer

A)  $3,100. 
B)  $2,700. 
C)  $300. 
D)  $700. 
A)  $3,100. 
B)  $2,700. 
C)  $300. 
D)  $700.

Question 20

Treadwell Company borrowed $32,000 of cash from a local bank. Which of the following choices accurately reflects how this event affects the company's financial statements?

Accepted Answer

A) 
  
B) 
  
C) 
  
D) 
  
A) 
  
B) 
  
C) 
  
D)

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Which of the following statements is true?

Vantage Corporation invested $800 cash in Tandem Company stock. Which of the following could describe the effects of an asset source transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

Dover Company experienced an accounting event that affected its financial statements as indicated below: Assets - = Liab. NA + Equity Rev NA - Exp + = Net Inc. - Cash Flow -OA Which of the following accounting events could have caused these effects on Dover's statements?

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Richardson Company paid $850 cash for rent expense. As a result of this business event,

Which of the following statements regarding cash transactions is true?

Which of the following could represent the effects of an asset source transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

Dover Company experienced an accounting event that affected its financial statements as indicated below: Assets - = Liab. NA + Equity Rev NA - Exp + = Net Inc. - Cash Flow -OA Which of the following accounting events could have caused these effects on Dover's statements?

On January 1, 2013, Baird Company had beginning balances as lows: Assets = $2,250 Liabilities = $620 Common Stock = $800 During 2013, Baird paid dividends to its stockholders of $900. Given that ending retained earnings was $600, what was Baird's net income for the 2013 accounting period?

Treadwell Company borrowed $32,000 of cash from a local bank. Which of the following choices accurately reflects how this event affects the company's financial statements?

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 1: An Introduction to Accounting

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Which of the following statements is true?

Vantage Corporation invested $800 cash in Tandem Company stock. Which of the following could describe the effects of an asset source transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

Dover Company experienced an accounting event that affected its financial statements as indicated below: Assets - = Liab. NA + Equity Rev NA - Exp + = Net Inc. - Cash Flow -OA Which of the following accounting events could have caused these effects on Dover's statements?

Which of the following could represent the effects of an asset exchange transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Richardson Company paid $850 cash for rent expense. As a result of this business event,

Which of the following statements regarding cash transactions is true?

Which of the following could represent the effects of an asset source transaction on a company's financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow

Dover Company experienced an accounting event that affected its financial statements as indicated below: Assets - = Liab. NA + Equity Rev NA - Exp + = Net Inc. - Cash Flow -OA Which of the following accounting events could have caused these effects on Dover's statements?

On January 1, 2013, Baird Company had beginning balances as lows: Assets = $2,250 Liabilities = $620 Common Stock = $800 During 2013, Baird paid dividends to its stockholders of $900. Given that ending retained earnings was $600, what was Baird's net income for the 2013 accounting period?

Treadwell Company borrowed $32,000 of cash from a local bank. Which of the following choices accurately reflects how this event affects the company's financial statements?

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

An Introduction to Management Accounting

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters