Question 1

Paying expenses affects which financial statement elements?

Accepted Answer

A)  Assets only
B)  Stockholders' equity only
C)  Assets and stockholders' equity
D)  Assets and liabilitiesE) All of the above
F) C) and D)

Question 2

The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

Accepted Answer

A) True 
 B)False

Question 3

Miscellaneous expenses are expenses that have an undetermined amount to be paid.

Accepted Answer

A) True 
 B)False

Question 4

A to Z Corporation 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.E) A) and B)
F) All of the above

Question 5

Sunlight,Inc.had the following assets and liabilities as of September 30,2016:

Accepted Answer

A)  $0
B)  $33,100
C)  $88,100
D)  Cannot be determined with this informationE) B) and D)
F) All of the above

Question 6

The following are included in Ace Auto Parts,Inc.'s December 31,2015 balance sheet:

Accepted Answer

Assets = Liabilities + Stockholder's Equ...

Question 7

For EFG Co.,the transaction "receipt of a utility bill" would:

Accepted Answer

A)  increase total assets.
B)  decrease total assets.
C)  have no effect on total assets.
D)  decrease total liabilities.E) B) and C)
F) All of the above

Question 8

Sunlight,Inc.had the following assets and liabilities as of September 30,2016

Accepted Answer

A)  ($1,450) 
B)  $1,450
C)  $7,250
D)  ($7,250) E) A) and B)
F) A) and C)

Question 9

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.

Accepted Answer

Yes to both questions.Examples...

Question 10

Johnson,Inc.purchased land for cash.What effect does this transaction have?

Accepted Answer

A)  Increase in Cash and decrease in Land
B)  Decrease in Cash and decrease in Land
C)  Increase in Cash and increase in Land
D)  Decrease in Cash and increase in LandE) None of the above
F) A) and D)

Question 11

Rush Corporation borrowed $25,000 from the bank.Which of the following accurately shows the effects of the transaction?

Accepted Answer

A)  Increase cash $25,000 and decrease notes payable $25,000
B)  Increase cash $25,000 and increase notes payable $25,000
C)  Decrease cash $25,000 and decrease notes payable $25,000
D)  Decrease cash $25,000 and increase notes payable $25,000E) B) and D)
F) None of the above

Question 12

For EFG Co.,the transaction "payment of dividends" would:

Accepted Answer

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

Question 13

If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:

Accepted Answer

A)  $140,000.
B)  $60,000.
C)  $80,000.
D)  $20,000.E) B) and C)
F) B) and D)

Question 14

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.E) B) and C)
F) B) and D)

Question 15

For EFG Co.,the transaction "receipt of interest income" would:

Accepted Answer

A)  increase total assets.
B)  decrease total assets.
C)  have no effect on total assets.
D)  decrease total liabilities.E) A) and B)
F) All of the above

Question 16

The income statement for August indicates net income of $100,000.The corporation also paid $25,000 in dividends during the same period.If the company is in operation for only one month and has no beginning balance in retained earnings,what is the ending balance in retained earnings?

Accepted Answer

A)  $75,000
B)  $100,000
C)  $20,000
D)  $125,000E) A) and B)
F) A) and C)

Question 17

How can a company earn a large net income and have a small balance in retained earnings?

Accepted Answer

The company may pay ...

Question 18

Which of the following is not an element of the financial accounting system?

Accepted Answer

A)  Rules for determining what,when and the amount that should be recorded
B)  A framework for preparing financial statements
C)  A set of rules for the stock exchange
D)  Controls to determine whether errors occur during recordingE) A) and B)
F) B) and C)

Question 19

The basic elements of a financial accounting system include a framework for preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 20

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

Accepted Answer

A)  Assets and stockholders' equity
B)  Assets and liabilities
C)  Liabilities and stockholders' equity
D)  None of theseE) B) and C)
F) A) and C)

Exam 2: Basic Accounting Concepts

If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:

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The basic elements of a financial accounting system include a framework for preparing financial statements.

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For EFG Co.,the transaction "receipt of interest income" would:

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Sunlight,Inc.had the following assets and liabilities as of September 30,2016

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

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ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

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The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements.

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For EFG Co.,the transaction "payment of dividends" would:

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Rush Corporation borrowed $25,000 from the bank.Which of the following accurately shows the effects of the transaction?

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The following are included in Ace Auto Parts,Inc.'s December 31,2015 balance sheet:

Correct AnswerverifiedAssets = Liabilities + Stockholder's Equ...View AnswerShow Answer

How can a company earn a large net income and have a small balance in retained earnings?

Correct AnswerverifiedThe company may pay ...View AnswerShow Answer

The income statement for August indicates net income of $100,000.The corporation also paid $25,000 in dividends during the same period.If the company is in operation for only one month and has no beginning balance in retained earnings,what is the ending balance in retained earnings?

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The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.

Correct AnswerverifiedYes to both questions.Examples...View AnswerShow Answer

Johnson,Inc.purchased land for cash.What effect does this transaction have?

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For EFG Co.,the transaction "receipt of a utility bill" would:

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Which of the following is not an element of the financial accounting system?

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Paying expenses affects which financial statement elements?

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A to Z Corporation purchased a building for $80,000 cash.On the Statement of Cash Flows,the transaction would be classified as:

Correct AnswerverifiedShow Answer

Miscellaneous expenses are expenses that have an undetermined amount to be paid.

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Sunlight,Inc.had the following assets and liabilities as of September 30,2016:

Correct AnswerverifiedShow Answer

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Assets = Liabilities + Stockholder's Equ...
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The company may pay ...
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Yes to both questions.Examples...
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