Question 1

Every transaction increases at least one account and decreases at least one account.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a FALSE statement?

Accepted Answer

A)  Total Assets are $1,929,800.
B)  Total Stockholders' equity is $1,130,260.
C)  Long-term liabilities are $130,260.
D)  The amount of current assets is 2.5 times the amount of current liabilities.E) B) and C)
F) A) and B)

Question 3

Which of the following statements regarding the balance sheet is true?

Accepted Answer

A)  Any item on a balance sheet labeled payable is a liability of that company.
B)  Current Assets are listed on the balance sheet in alphabetical order.
C)  Assets + Liabilities = Equity
D)  It lists all the accounts and their debit and credit balances.E) B) and D)
F) B) and C)

Question 4

How will a company's current ratio be affected when the company receives $20,000 from owners and issues stock to them?

Accepted Answer

A)  The current ratio will increase because current assets increase.
B)  The current ratio will increase because current liabilities decrease.
C)  There will be no change in the company's current ratio.
D)  The current ratio will decrease because current liabilities increase.E) None of the above
F) C) and D)

Question 5

A business is obliged to repay both debt and equity financing.

Accepted Answer

A) True 
 B)False

Question 6

The best interpretation of the word "credit" is the

Accepted Answer

A)  left side of an account.
B)  increase side of an account.
C)  right side of an account.
D)  decrease side of an account.E) A) and B)
F) C) and D)

Question 7

Which account would be decreased by a credit?

Accepted Answer

A)  Cash
B)  Accounts payable
C)  Contributed capital
D)  Retained earningsE) A) and B)
F) A) and C)

Question 8

What is the amount of the change in stockholders' equity in the year 2013?

Accepted Answer

A)  $5,750 increase.
B)  $700 decrease.
C)  $6,300 decrease.
D)  $550 increase.E) A) and C)
F) None of the above

Question 9

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 total cash will increase.
D)  (a) and (b) are increases.E) B) and D)
F) A) and B) D

Question 10

A Company has $15,000 of retained earnings,$26,000 of assets,and $6,000 of liabilities.How much is contributed capital?

Accepted Answer

A)  $17,000
B)  $15,000
C)  $5,000
D)  $35,000E) A) and B)
F) None of the above C

Question 11

Your company buys a $2 million warehouse paying $300,000 in cash and issuing $1.7 million in promissory notes.This will be posted as:

Accepted Answer

A)  $2 million credited and $300,000 debited to assets;$1.7 million debited to liabilities.
B)  $2 million debited to assets and $2 million credited to liabilities.
C)  $2 million debited and $300,000 credited to assets;$1.7 million credited to liabilities.
D)  $2 million credited to assets and $2 million debited to liabilities.E) B) and C)
F) A) and C)

Question 12

What would be the effect on the current ratio if the company paid $10,000 on its accounts payable?

Accepted Answer

A)  The current ratio would increase since it is now greater than 1 to 1.
B)  The current ratio would decrease since it is now greater than 1 to 1.
C)  This transaction would have no effect on the current ratio.
D)  The current ratio would change in the same direction whether the ratio were now greater than or less than 1 to 1.E) None of the above
F) B) and C)

Question 13

If Accounts Payable had a balance of $18,200 at the beginning of the month,and the six amounts shown below were posted to this account,what should be the ending balance?

Accepted Answer

A)  $13,200
B)  $5,000
C)  $23,200
D)  $49,000E) B) and D)
F) C) and D) A

Question 14

Which of the following is normally true?

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.E) A) and B)
F) None of the above

Question 15

In part,a transaction affects the accounting equation as follows:  Which of the following must be true for this transaction?

Accepted Answer

A)  If other assets are unchanged,stockholders' equity must be increasing.
B)  If other assets are unchanged,stockholders' equity must be decreasing.
C)  If stockholders' equity is unchanged,another asset must be decreasing.
D)  If stockholders' equity is unchanged,other assets must be unchanged.E) C) and D)
F) A) and D)

Question 16

Which of the following would cause a trial balance to be out of balance?

Accepted Answer

A)  A transaction was recorded twice.
B)  A transaction was not recorded.
C)  A transaction was posted to the wrong accounts.
D)  Only the credit of a transaction was recorded.E) None of the above
F) B) and D)

Question 17

The acquisition of equipment in an exchange for a company's stock would increase the current ratio of the company.

Accepted Answer

A) True 
 B)False

Question 18

The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Accepted Answer

A)  Cash
B)  Accounts Payable
C)  Notes Payable
D)  Accounts ReceivableE) C) and D)
F) A) and B)

Question 19

Journal entries show the effects of transactions on the elements of the accounting equation,as well as the account balances.

Accepted Answer

A) True 
 B)False

Question 20

Transactions are analyzed from the point of view of the company,not the company's owners.

Accepted Answer

A) True 
 B)False

Exam 2: The Balance Sheet

Every transaction increases at least one account and decreases at least one account.

Correct AnswerverifiedShow Answer

Which of the following is a FALSE statement?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the balance sheet is true?

Correct AnswerverifiedShow Answer

How will a company's current ratio be affected when the company receives $20,000 from owners and issues stock to them?

Correct AnswerverifiedShow Answer

A business is obliged to repay both debt and equity financing.

Correct AnswerverifiedShow Answer

The best interpretation of the word "credit" is the

Correct AnswerverifiedShow Answer

Which account would be decreased by a credit?

Correct AnswerverifiedShow Answer

What is the amount of the change in stockholders' equity in the year 2013?

Correct AnswerverifiedShow Answer

In the T-account above:

Correct AnswerverifiedD

A Company has $15,000 of retained earnings,$26,000 of assets,and $6,000 of liabilities.How much is contributed capital?

Correct AnswerverifiedC

Your company buys a $2 million warehouse paying $300,000 in cash and issuing $1.7 million in promissory notes.This will be posted as:

Correct AnswerverifiedShow Answer

What would be the effect on the current ratio if the company paid $10,000 on its accounts payable?

Correct AnswerverifiedShow Answer

If Accounts Payable had a balance of $18,200 at the beginning of the month,and the six amounts shown below were posted to this account,what should be the ending balance?

Correct AnswerverifiedA

Which of the following is normally true?

Correct AnswerverifiedShow Answer

In part,a transaction affects the accounting equation as follows: Which of the following must be true for this transaction?

Correct AnswerverifiedShow Answer

Which of the following would cause a trial balance to be out of balance?

Correct AnswerverifiedShow Answer

The acquisition of equipment in an exchange for a company's stock would increase the current ratio of the company.

Correct AnswerverifiedShow Answer

The Buddy Burger Corporation owes $1.5 million to the Texas Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Correct AnswerverifiedShow Answer

Journal entries show the effects of transactions on the elements of the accounting equation,as well as the account balances.

Correct AnswerverifiedShow Answer

Transactions are analyzed from the point of view of the company,not the company's owners.

Correct AnswerverifiedShow Answer

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D

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C

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A

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