Question 1

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  False

Question 2

Exhibit 2-1
 
-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 B

Question 3

What are the basic elements of a financial accounting system?

Accepted Answer

A financial accounting system is designed to produce financial statements.The basic elements of a financial accounting system include:

Question 4

Exhibit 2-1
 
-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

Question 5

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.

Question 6

The following are included in Ace Auto Parts,Inc.'s December 31,2010 balance sheet:
  
Below are the balances for December 31,2011:
  
Analyze the changes in these balances and determine net income for 2011,assuming that the only change to stockholders' equity is from net income.

Accepted Answer

The answer of The following are included in Ace Auto...

Question 7

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 8

A to Z Corporation engaged in the following transaction "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.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

For EFG Co. ,the transaction "Purchase of store equipment with cash" would

Accepted Answer

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

Question 11

A transaction can affect at most two elements of the accounting equation.

Accepted Answer

A) True 
 B)False

Question 12

The payment of $15,000 for expenses was recorded by Spears Co.as an increase in cash of $15,000 and a decrease in retained earnings of $15,000.What is the effect of this error on the accounting equation?

Accepted Answer

A)  Total assets will exceed total liabilities and stockholders' equity by $15,000.
B)  Total assets will exceed total liabilities and stockholders' equity by $30,000.
C)  Total assets will be less than total liabilities and stockholders' equity by $30,000.
D)  The error will not affect the accounting equation.

Question 13

For EFG Co. ,the transaction "Billed a customer for fees earned" would

Accepted Answer

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

Question 14

Calculate the following:

Accepted Answer

The answer of Calculate the following:
 ...

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Receiving cash for fees earned affects which financial statement elements?

Accepted Answer

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

Question 17

Declaring and paying cash dividends affects which accounts?

Accepted Answer

A)  Cash only
B)  Capital stock only
C)  Cash and retained earnings
D)  Cash and capital stock

Question 18

Declaring and paying cash dividends affects which balance sheet accounts?

Accepted Answer

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

Question 19

The two sides of the accounting equation do NOT have to be equal.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following accounts is a stockholders' equity account?

Accepted Answer

A)  Cash
B)  Capital Stock
C)  Prepaid Insurance
D)  Accounts Payable

Exam 2: Basic Accounting Concepts

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

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

What are the basic elements of a financial accounting system?

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

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

The following are included in Ace Auto Parts,Inc.'s December 31,2010 balance sheet: Below are the balances for December 31,2011: Analyze the changes in these balances and determine net income for 2011,assuming that the only change to stockholders' equity is from net income.

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.

A to Z Corporation engaged in the following transaction "Purchased a building for $80,000 cash." On the Statement of Cash Flows,the transaction would be classified as

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

For EFG Co. ,the transaction "Purchase of store equipment with cash" would

A transaction can affect at most two elements of the accounting equation.

The payment of $15,000 for expenses was recorded by Spears Co.as an increase in cash of $15,000 and a decrease in retained earnings of $15,000.What is the effect of this error on the accounting equation?

For EFG Co. ,the transaction "Billed a customer for fees earned" would

Calculate the following:

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

Receiving cash for fees earned affects which financial statement elements?

Declaring and paying cash dividends affects which accounts?

Declaring and paying cash dividends affects which balance sheet accounts?

The two sides of the accounting equation do NOT have to be equal.

Which of the following accounts is a stockholders' equity account?