Question 1

The following transactions occurred at Clarkson Company:
1.The company acquired $200 of inventory on credit.
2.The company rendered services billed at $100 on account.
3.The company paid $175 in accounts payable.
4.The company's owner invested $375 in cash.
5.The company acquired equipment costing $575 on account.
6.The company paid $25 for inventory.
Required:
In the chart below,indicate if each transaction increases,decreases or has no effect on Assets,Liabilities and Stockholders' Equity.
 $\begin{array} { l l l l } \text { Transaction } & \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \ & \text { Increase } & \text { Increase } & \text { No effect } \end{array}$
1.
2.
3.
4.
5.
6.

Accepted Answer

$$\begin{array} { l l l l } 
\hline \text { Transaction } & \text { Assets } & \text { Liabilities } & \text { Stockholders' Equity } \
\hline 1.&\text { Increase } & \text { Increase } & \text { No effect } \
\hline 2.&\text { Increase } & \text { No effect } & \text { Increase } \
\hline 3.&\text { Decrease } & \text { Decrease } & \text { No effect } \
\hline 4.&\text { Increase } & \text { No effect } & \text { Increase } \
\hline 5.&\text { Increase } & \text { Increase } & \text { No effect } \
\hline 6.&\text { Increase and } & \text { No effect } & \text { No effect }\&\text { Decrease }
\end{array}$$

Question 2

In a partnership,a partner's capital account is increased by ________.

Accepted Answer

A)   dividends
B)   a partner's share of net income
C)   contributions made by a partner
D)   B and C D

Question 3

The income statement measures performance over a given amount of time.

Accepted Answer

A) True 
 B)False  True

Question 4

A company uses the going concern convention when it is in a near-bankrupt situation.

Accepted Answer

A) True 
 B)False

Question 5

An example of an implicit transaction is cash received on account.

Accepted Answer

A) True 
 B)False

Question 6

Sunday Company reports the following information on December 31,2014:
$$\begin{array} { l l } 
\text { Cash } & \$ 20,000 \
\text { Accounts receivable } & 112,000 \
\text { Accounts payable } & 91,000 \
\text { Accrued wages payable } & 6,000 \
\text { Unearned revenue } & 2,000 \
\text { Paid-in capital } & 59,000 \
\text { Retained earnings } & 80,000 \
\text { Inventory } & 30,000 \
\text { Prepaid rent } & 4,000 \
\text { Equipment (net) } & 12,000
\end{array}$$
What are total assets at December 31,2014?

Accepted Answer

A)   $162,000
B)   $166,000
C)   $178,000
D)   $180,000

Question 7

Jackson Company collected $1,200 on account.Jackson will ________.

Accepted Answer

A)   Debit Cash $1,200 and Credit Accounts Payable $1,200
B)   Debit Accounts Receivable $1,200 and Credit Cash $1,200
C)   Debit Accounts Payable $1,200 and Credit Cash $1,200
D)   Debit Cash $1,200 and Credit Accounts Receivable $1,200

Question 8

Which financial statement discloses the economic resources of the organization and the claims against those resources?

Accepted Answer

A)   income statement
B)   statement of cash flows
C)   statement of retained earnings
D)   balance sheet

Question 9

The excess of revenues over expenses is called a net profit.

Accepted Answer

A) True 
 B)False

Question 10

The acquisition of inventory for cash will ________.

Accepted Answer

A)   increase liabilities and decrease stockholders' equity
B)   decrease assets and decrease liabilities
C)   increase assets and decrease liabilities
D)   increase assets and decrease assets

Question 11

Increases in revenues will ________.Increases in expenses will ________ .

Accepted Answer

A)   increase Retained Earnings; increase Retained Earnings
B)   increase Retained Earnings; decrease Retained Earnings
C)   decrease Paid in Capital; decrease Paid in Capital
D)   increase assets; increase liabilities

Question 12

A sole proprietorship has ________ owner's equity account(s).A partnership with three partners has ________ owners' equity account(s).

Accepted Answer

A)   one; one
B)   two; one
C)   one; three
D)   one; four

Question 13

On June 1,2012,a company borrows $100,000 on a 10% note due to a bank in one year.What amount of interest expense is reported for the year ending December 31,2012?

Accepted Answer

A)   $5,000
B)   $5,833
C)   $1,000
D)   $10,000

Question 14

The accounting convention of ________ permits a company to immediately expense assets with long useful lives and small dollar costs.

Accepted Answer

A)   objectivity
B)   materiality
C)   continuity
D)   conservatism

Question 15

Cash collected from customers before goods are delivered is known as ________.

Accepted Answer

A)   unearned revenue
B)   deferred revenue
C)   customer advances
D)   all of the above

Question 16

Decreases in ownership claims arising from the delivery of goods are called ________.

Accepted Answer

A)   revenues
B)   profits
C)   liabilities
D)   expenses

Question 17

Revenue and expense accounts are permanent stockholders' equity accounts.

Accepted Answer

A) True 
 B)False

Question 18

Hope Company has the following data available:
$\begin{array} { l  }
 \text {Retained Earnings, January 1, 2011 }&\$12,000 \
 \text {Net income for the year ending December 31,2011 }&\$3,000 \
 \text {Dividends declared in 2011 }&\$2,000 \
 \text {Paid-in Capital, January 1, 2011 }&\$ 50,000\
 \text { Total liabilities, January 1, 2011}&\$ 40,000\
\end{array}$

What is the retained earnings balance on December 31,2011?

Accepted Answer

A)   $12,000
B)   $13,000
C)   $14,000
D)   $63,000

Question 19

A magazine publisher sells annual subscriptions for magazines.The publisher requires cash payment before the magazines are sent out.When the first monthly issue is sent out,the company will ________.

Accepted Answer

A)   increase liabilities and increase assets
B)   increase assets and increase revenues
C)   increase revenues and decrease liabilities
D)   increase liabilities and decrease revenues

Question 20

Dividends paid are considered an expense on the income statement.

Accepted Answer

A) True 
 B)False

Exam 15: Basic Accounting: Concepts, techniques, and Conventions

In a partnership,a partner's capital account is increased by ________.

The income statement measures performance over a given amount of time.

A company uses the going concern convention when it is in a near-bankrupt situation.

An example of an implicit transaction is cash received on account.

Jackson Company collected $1,200 on account.Jackson will ________.

Which financial statement discloses the economic resources of the organization and the claims against those resources?

The excess of revenues over expenses is called a net profit.

The acquisition of inventory for cash will ________.

Increases in revenues will .Increases in expenses will .

A sole proprietorship has owner's equity account(s) .A partnership with three partners has owners' equity account(s) .

On June 1,2012,a company borrows $100,000 on a 10% note due to a bank in one year.What amount of interest expense is reported for the year ending December 31,2012?

The accounting convention of ________ permits a company to immediately expense assets with long useful lives and small dollar costs.

Cash collected from customers before goods are delivered is known as ________.

Decreases in ownership claims arising from the delivery of goods are called ________.

Revenue and expense accounts are permanent stockholders' equity accounts.

A magazine publisher sells annual subscriptions for magazines.The publisher requires cash payment before the magazines are sent out.When the first monthly issue is sent out,the company will ________.

Dividends paid are considered an expense on the income statement.

Exam 15: Basic Accounting: Concepts, techniques, and Conventions

In a partnership,a partner's capital account is increased by ________.

The income statement measures performance over a given amount of time.

A company uses the going concern convention when it is in a near-bankrupt situation.

An example of an implicit transaction is cash received on account.

Jackson Company collected $1,200 on account.Jackson will ________.

Which financial statement discloses the economic resources of the organization and the claims against those resources?

The excess of revenues over expenses is called a net profit.

The acquisition of inventory for cash will ________.

Increases in revenues will ________.Increases in expenses will ________ .

A sole proprietorship has ________ owner's equity account(s) .A partnership with three partners has ________ owners' equity account(s) .

On June 1,2012,a company borrows $100,000 on a 10% note due to a bank in one year.What amount of interest expense is reported for the year ending December 31,2012?

The accounting convention of ________ permits a company to immediately expense assets with long useful lives and small dollar costs.

Cash collected from customers before goods are delivered is known as ________.

Decreases in ownership claims arising from the delivery of goods are called ________.

Revenue and expense accounts are permanent stockholders' equity accounts.

A magazine publisher sells annual subscriptions for magazines.The publisher requires cash payment before the magazines are sent out.When the first monthly issue is sent out,the company will ________.

Dividends paid are considered an expense on the income statement.

Increases in revenues will .Increases in expenses will .

A sole proprietorship has owner's equity account(s) .A partnership with three partners has owners' equity account(s) .