Question 1

During the current year,Sue Shells,Inc.'s total liabilities decreased by $50,000 and stockholders' equity increased by $10,000.By what amount and in what direction did Sue's total assets change during the same time period?

Accepted Answer

A)  $40,000 increase
B)  $40,000 decrease
C)  $60,000 increase
D)  $60,000 decrease

Question 2

Candy Cane opened an ice cream store on June 1 and hired an accounting intern to help her establish the business.The intern has identified the following transactions.Which of these transactions is not an accounting transaction?

Accepted Answer

A)  Purchased $3,400 of milk and cream from a local dairy
B)  Signed a contract to deliver $1,200 of ice cream for a July 4th party
C)  Paid June rent of $2,300
D)  Borrowed money from the bank by signing a promissory note for $5,000

Question 3

Assume a company only entered into financing and investing activities and has prepared its journal entries and posted them to T-accounts.How would the related account balances be listed on its trial balance?

Accepted Answer

A)  Credits first,followed by debits
B)  Debits first,followed by credits
C)  Alphabetically
D)  In descending order by dollar amount

Question 4

O'Brien Construction had the following business activities:
1.Stockholders invest $50,000 cash in the corporation.
2.CBI purchased $800 of office supplies on credit.
3.CBI purchased office equipment for $14,000,paying $5,000 in cash and signing a 30-day note payable for the remainder.
4.CBI paid $400 cash on account for office supplies purchased in transaction 2.
5.CBI purchased two acres of land for $20,000,signing a 2-year note payable.
6.CBI sold one acre of land at one-half of the total cost of the two acres,receiving the full amount or $10,000 in cash.
7.CBI made a payment of $10,000 on its 2-year note.
Required:
Prepare the journal entries that would be used to record the transactions.(Reference each journal entry to the transaction number,shown above).

Accepted Answer

The answer of O'Brien Construction had the following business activities:
1.Stockholders...

Question 5

What does a business typically receive when it issues stock to owners?

Accepted Answer

A)  Promissory note
B)  Stock certificate
C)  Equipment
D)  Cash

Question 6

Which of the following statements about normal account balances is correct?

Accepted Answer

A)  Assets have debit balances and liabilities have credit balances.
B)  Assets and liabilities have credit balances.
C)  Assets have credit balances and liabilities have debit balances.
D)  Assets and liabilities have debit balances.

Question 7

Which of the following statements is correct?

Accepted Answer

A)  A current ratio of 1.60 means the company's current assets are probably not sufficient to pay its current liabilities.
B)  The separate entity assumption requires that the financial activities of the owners of a company be reported on the company's balance sheet.
C)  The cost principle states that recording activities at cost will result in the balance sheet representing the true value of the company.
D)  A transaction is recorded if it has a measurable financial effect on the assets,liabilities or stockholders' equity of a business.

Question 8

For each of the following,indicate how the event would most likely be categorized.
-The company uses up office supplies.

Accepted Answer

A)  NT - No Transaction
B)  EE - External Exchange
C)  IE - Internal Event

Question 9

Which account would be increased with a debit?

Accepted Answer

A)  Supplies
B)  Accounts Payable
C)  Common Stock
D)  Retained Earnings

Question 10

Which of the following statements about the debit/credit framework is correct?

Accepted Answer

A)  Stockholders' Equity = Assets + Liabilities.
B)  The total value of credits in all accounts must always equal the total value of debits in all accounts.
C)  The normal balance for an account is the side on which it decreases.
D)  A decrease in Common Stock would be recorded with a credit.

Question 11

The Accounts Receivable account:

Accepted Answer

A)  has a normal credit balance.
B)  is increased by a debit.
C)  is a liability.
D)  is increased when a company receives cash from its customers.

Question 12

Match the term with its definition.(There are more definitions than terms. ) 
-Cost Principle

Accepted Answer

A)  A summary of account names and numbers.
B)  A simplified version of an account in the General Ledger.
C)  Compares balance sheet items from two different time periods.
D)  When a dollar value is assigned to an item recorded in the accounting system.
E)  A journal entry that lowers the balance of the account.F) An amount that is posted on the left side of a T-account or ledger.G) The concept that a company must keep separate accounts by time period.H) An amount that is posted on the right side of a T-account or ledger.I) Assets are initially recorded at the amount paid to acquire them.J) When journal entries are recorded in the appropriate T-account or ledger.K) When a company's balance sheet has been verified by an outside auditor.L) The principle that a company should use the least optimistic measure,when uncertainty exists.M) The concept that any transaction must have at least two effects on the accounting equation.N) The mechanism used to record each transaction in the General Journal.

Question 13

The normal balance of an account is on the same side that decreases the account.

Accepted Answer

A) True 
 B)False

Question 14

With a classified balance sheet,current assets are usually listed:

Accepted Answer

A)  in alphabetical order.
B)  in the order of when the assets were acquired.
C)  from the largest to smallest dollar amount.
D)  in the order of liquidity.

Question 15

On September 5,Heidi Co. ,purchases $87,000 of supplies;payment is not required until October 4.What action should be taken by Heidi on September 5?

Accepted Answer

A)  No journal entry is required;this transaction should not be recorded until the payment is made.
B)  A journal entry that includes a credit to Accounts Payable should be prepared.
C)  A journal entry that includes a debit to Accounts Payable should be prepared.
D)  A journal entry that includes a debit to Prepaid Expenses should be prepared.

Question 16

Which of the following is an example of proper accounting when it comes to reporting values on a company's balance sheet?

Accepted Answer

A)  X Company reported its land at the amount it could be sold for on the balance sheet date,which is higher than the original cost of the land.
B)  X Company reported its damaged equipment at an amount lower than it originally cost.
C)  X Company reported its inventory at its current market value,which is higher than its original cost.
D)  X Company reported its notes receivable at the amount it originally loaned to employees,some of whom have since been laid off.

Question 17

Match the term with its definition.(There are more definitions than terms. ) 
-Debit

Accepted Answer

A)  A summary of account names and numbers.
B)  A simplified version of an account in the General Ledger.
C)  Compares balance sheet items from two different time periods.
D)  When a dollar value is assigned to an item recorded in the accounting system.
E)  A journal entry that lowers the balance of the account.F) An amount that is posted on the left side of a T-account or ledger.G) The concept that a company must keep separate accounts by time period.H) An amount that is posted on the right side of a T-account or ledger.I) Assets are initially recorded at the amount paid to acquire them.J) When journal entries are recorded in the appropriate T-account or ledger.K) When a company's balance sheet has been verified by an outside auditor.L) The principle that a company should use the least optimistic measure,when uncertainty exists.M) The concept that any transaction must have at least two effects on the accounting equation.N) The mechanism used to record each transaction in the General Journal.

Question 18

In the T-account above:

Accepted Answer

A)  (
A)  and (b) are credits.
B)  (c) through (g) are debits.
C)  if the sum of (a) and (b) is less than the sum of (
C)  through (g) ,the Cash account balance will increase.
D)  (a) and (b) are increases.

Question 19

The trial balance is a financial statement that reports the assets,liabilities,and equity of a business at a point in time.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is not a current asset?

Accepted Answer

A)  Cash
B)  Supplies
C)  Equipment
D)  Prepaid Insurance

Exam 2: The Balance Sheet

Which one of the following is not a current asset?

Correct Answer
verified

During the current year,Sue Shells,Inc.'s total liabilities decreased by $50,000 and stockholders' equity increased by $10,000.By what amount and in what direction did Sue's total assets change during the same time period?

Correct Answer
verified

With a classified balance sheet,current assets are usually listed:

Correct Answer
verified

Match the term with its definition.(There are more definitions than terms. ) -Cost Principle

Correct Answer
verified

The Accounts Receivable account:

Correct Answer
verified

The normal balance of an account is on the same side that decreases the account.

Correct Answer
verified

Candy Cane opened an ice cream store on June 1 and hired an accounting intern to help her establish the business.The intern has identified the following transactions.Which of these transactions is not an accounting transaction?

Correct Answer
verified

Which of the following statements about the debit/credit framework is correct?

Correct Answer
verified

Correct Answer
verified

Which of the following is an example of proper accounting when it comes to reporting values on a company's balance sheet?

Correct Answer
verified

On September 5,Heidi Co. ,purchases $87,000 of supplies;payment is not required until October 4.What action should be taken by Heidi on September 5?

Correct Answer
verified

Assume a company only entered into financing and investing activities and has prepared its journal entries and posted them to T-accounts.How would the related account balances be listed on its trial balance?

Correct Answer
verified

Match the term with its definition.(There are more definitions than terms. ) -Debit

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Which account would be increased with a debit?

Correct Answer
verified

For each of the following,indicate how the event would most likely be categorized. -The company uses up office supplies.

Correct Answer
verified

In the T-account above:

Correct Answer
verified

The trial balance is a financial statement that reports the assets,liabilities,and equity of a business at a point in time.

Correct Answer
verified

What does a business typically receive when it issues stock to owners?

Correct Answer
verified

Which of the following statements about normal account balances is correct?

Correct Answer
verified

Exam 2: The Balance Sheet

Which one of the following is not a current asset?

Correct AnswerverifiedShow Answer

During the current year,Sue Shells,Inc.'s total liabilities decreased by $50,000 and stockholders' equity increased by $10,000.By what amount and in what direction did Sue's total assets change during the same time period?

Correct AnswerverifiedShow Answer

With a classified balance sheet,current assets are usually listed:

Correct AnswerverifiedShow Answer

Match the term with its definition.(There are more definitions than terms. ) -Cost Principle

Correct AnswerverifiedShow Answer

The Accounts Receivable account:

Correct AnswerverifiedShow Answer

The normal balance of an account is on the same side that decreases the account.

Correct AnswerverifiedShow Answer

Candy Cane opened an ice cream store on June 1 and hired an accounting intern to help her establish the business.The intern has identified the following transactions.Which of these transactions is not an accounting transaction?

Correct AnswerverifiedShow Answer

Which of the following statements about the debit/credit framework is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an example of proper accounting when it comes to reporting values on a company's balance sheet?

Correct AnswerverifiedShow Answer

On September 5,Heidi Co. ,purchases $87,000 of supplies;payment is not required until October 4.What action should be taken by Heidi on September 5?

Correct AnswerverifiedShow Answer

Assume a company only entered into financing and investing activities and has prepared its journal entries and posted them to T-accounts.How would the related account balances be listed on its trial balance?

Correct AnswerverifiedShow Answer

Match the term with its definition.(There are more definitions than terms. ) -Debit

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which account would be increased with a debit?

Correct AnswerverifiedShow Answer

For each of the following,indicate how the event would most likely be categorized. -The company uses up office supplies.

Correct AnswerverifiedShow Answer

In the T-account above:

Correct AnswerverifiedShow Answer

The trial balance is a financial statement that reports the assets,liabilities,and equity of a business at a point in time.

Correct AnswerverifiedShow Answer

What does a business typically receive when it issues stock to owners?

Correct AnswerverifiedShow Answer

Which of the following statements about normal account balances is correct?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified