Question 1

Which of the following would not be classified as a current asset?

Accepted Answer

A)   Cash
B)   Accounts payable
C)   Supplies
D)   InventoryE) A) and C)
F) All of the above

Question 2

A company receives $100,000 cash from investors in exchange for stock. Several weeks later, the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. The accounts involved in these two transactions are:

Accepted Answer

A)   Long-term Investments; Cash; Equipment; and Accounts Payable.
B)   Contributed Capital; Cash; Long-term Investments; and Notes Payable.
C)   Contributed Capital; Cash; Equipment; and Notes Payable.
D)   Retained Earnings; Equipment; and Notes Payable.E) B) and C)
F) A) and C)

Question 3

A company entered into the following transaction: Purchased equipment for use in the business at a cost of $12,000, one-fourth was paid in cash and the company signed a note for the balance. Choose the TRUE
Statement about the journal entry to record this transaction.

Accepted Answer

A)   The journal entry will include a debit to Notes receivable of $3,000.
B)   The journal entry will include a debit to Cash of $12,000.
C)   The journal entry will include a credit to Notes payable of $9,000.
D)   The journal entry will include a credit to Equipment $12,000.E) A) and B)
F) A) and C)

Question 4

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)   $36,000
B)   $15,000
C)   $5,000
D)   $6,000E) All of the above
F) A) and C)

Question 5

The ledger consists of all of the accounts used by a business.

Accepted Answer

A) True 
 B)False

Question 6

What is the minimum number of accounts that must be involved in any transaction?

Accepted Answer

A)   One.
B)   Two.
C)   Three.
D)   No minimum.E) None of the above
F) B) and C)

Question 7

Which of the following is a recordable transaction for the company, Bobby and Sandy Store?

Accepted Answer

A)   The company signed an agreement to rent store space at $200 month.
B)   The vice president of the company spoke at a luncheon which contributed to enhancing the company's reputation as a responsible company.
C)   The company ordered supplies for $500.
D)   The company lent $500 to an employee.E) None of the above
F) All of the above

Question 8

At the start of the first year of operations, retained earnings on the balance sheet would be:

Accepted Answer

A)   equal to zero.
B)   equal to contributed capital.
C)   equal to stockholders' equity.
D)   equal to the negative of liabilities.E) None of the above
F) A) and B)

Question 9

The local branch of the Universal Bank System (UBS)  receives money from depositors and lends it to borrowers. Which of the following would be true about UBS's financial statements?

Accepted Answer

A)   UBS reports deposits as assets and loans as liabilities.
B)   UBS reports both deposits and loans as assets.
C)   UBS reports deposits as liabilities and loans as assets.
D)   UBS reports both deposits and loans as liabilities.E) All of the above
F) A) and B)

Question 10

All of a company's business activities have a direct economic effect on the company.

Accepted Answer

A) True 
 B)False

Question 11

According to the principle of conservatism, when faced with uncertainty about the value of an item, a company should use the measure that avoids:

Accepted Answer

A)   overstating assets and liabilities.
B)   overstating assets and understating liabilities.
C)   understating assets and overstating liabilities.
D)   understating assets and liabilities.E) B) and D)
F) A) and D)

Question 12

A current asset is one that:

Accepted Answer

A)   the company has owned for over one year.
B)   the company has owned for over five years.
C)   the company will use up or convert into cash in less than one year.
D)   the company will use up or convert into cash in less than five years.E) A) and B)
F) A) and C)

Question 13

Your company orders and broadcasts a 30 second ad during the Super Bowl for $1.2 million. It is lega lly obligated to pay for the ad but has not yet done so.

Accepted Answer

A)   This is an internal event and it does NOT affect the balance sheet.
B)   This is an external event and it does NOT affect the balance sheet.
C)   This is an internal event that affects the balance sheet.
D)   This is an external event that affects the balance sheet.E) A) and B)
F) A) and C)

Question 14

The

Accepted Answer

A)   Equity financing refers to the money obtained through owners' contributions and reinvestments of profit.
B)   Debt financing refers to the money obtained through loans.
C)   The business is obligated to repay debt financing.
D)   The business is obligated to repay equity financing.
E)   Flynn Company started business by obtaining financing through debt financing and equity financing. Which of the following statements is FALSE?F) None of the above
G) All of the above

Question 15

The standard formatting for a journal entry:

Accepted Answer

A)   lists credits first and then debits, both aligned to the left.
B)   lists credits first and then debits, indented underneath.
C)   lists debits first and then credits, both aligned to the right.
D)   lists debits first and then credits, indented underneath.E) A) and B)
F) All of the above

Question 16

A "classified" balance sheet is one that contains privileged information.
All liabilities require that the company sacrifice resources at some time in the future.
All companies use an identical list of account names defined by the Financial Accounting Standards Board
(FASB) .

Accepted Answer

A)   None
B)   One
C)   Two
D)   ThreeE) A) and B)
F) All of the above

Question 17

What is the amount of Total Liabilities on the Balance Sheet?

Accepted Answer

A)   $240,116
B)   $37,308
C)   $63,124
D)   $118,644E) B) and D)
F) A) and D)

Question 18

Current liabilities are expected to be

Accepted Answer

A)   converted to cash within one year.
B)   paid within one year.
C)   used in the business within one year.
D)   acquired within one year.E) B) and D)
F) C) and D)

Question 19

Which of the following is an accurate description of the economic events involving Accounts Receivable as documented in the T-Account above?

Accepted Answer

A)   There were more customers paying off balances than there were customers adding to their balances.
B)   There were more customers adding to their balances than paying off their balances.
C)   The company paid off its debt more than it incurred new debt.
D)   The company incurred more debt than it paid off.E) A) and B)
F) A) and D)

Question 20

What is the amount of total liabilities?

Accepted Answer

A)   $6,000
B)   $15,600
C)   $16,000
D)   $5,600E) A) and B)
F) A) and C)

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

Which of the following would not be classified as a current asset?

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The standard formatting for a journal entry:

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Which of the following is a recordable transaction for the company, Bobby and Sandy Store?

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A company receives $100,000 cash from investors in exchange for stock. Several weeks later, the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. The accounts involved in these two transactions are:

Correct AnswerverifiedShow Answer

Which of the following is an accurate description of the economic events involving Accounts Receivable as documented in the T-Account above?

Correct AnswerverifiedShow Answer

According to the principle of conservatism, when faced with uncertainty about the value of an item, a company should use the measure that avoids:

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What is the minimum number of accounts that must be involved in any transaction?

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The ledger consists of all of the accounts used by a business.

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A current asset is one that:

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Current liabilities are expected to be

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All of a company's business activities have a direct economic effect on the company.

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What is the amount of total liabilities?

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A "classified" balance sheet is one that contains privileged information. All liabilities require that the company sacrifice resources at some time in the future. All companies use an identical list of account names defined by the Financial Accounting Standards Board (FASB) .

Correct AnswerverifiedShow Answer

The local branch of the Universal Bank System (UBS) receives money from depositors and lends it to borrowers. Which of the following would be true about UBS's financial statements?

Correct AnswerverifiedShow Answer

At the start of the first year of operations, retained earnings on the balance sheet would be:

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A company entered into the following transaction: Purchased equipment for use in the business at a cost of $12,000, one-fourth was paid in cash and the company signed a note for the balance. Choose the TRUE Statement about the journal entry to record this transaction.

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

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The

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Your company orders and broadcasts a 30 second ad during the Super Bowl for $1.2 million. It is lega lly obligated to pay for the ad but has not yet done so.

Correct AnswerverifiedShow Answer

What is the amount of Total Liabilities on the Balance Sheet?

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