Question 1

Which of the following transactions wouldn't be considered an external exchange?

Accepted Answer

A)  The purchase of inventory on credit from a supplier.
B)  Cash received from a credit customer.
C)  Cash paid for wages to employees.
D)  Using up insurance which was paid for in advance.E) All of the above
F) C) and D)

Question 2

Tiger Company's stockholders' equity at the beginning of the year was $175,000.During the year Tiger reported the following:
Net income of $79,000.
Dividend declarations totaling $17,000.
Issued stock to stockholders in exchange for $42,000 cash.
Stockholders sold some of their stock to other stockholders for $11,000 cash.
What is Tiger's stockholders' equity at the end of the year?

Accepted Answer

A)  $296,000
B)  $279,000
C)  $290,000
D)  $273,000E) None of the above
F) B) and D)

Question 3

Which of the following journal entries is correct when a business entity issues stock to stockholders in exchange for cash?

Accepted Answer

A)   Cash   \quad   Retained Earnings
B)   Cash   \quad  Contributed Capital
C)   Cash   \quad  Accounts Payable
D)   Contributed Capital   \quad     \quad  Cash E) B) and D)
F) B) and C)

Question 4

How is the current ratio calculated and what does it measure?

Accepted Answer

The answer of How is the current ratio calculated and...

Question 5

Assets,liabilities,and stockholders' equity are found within which of the following financial statements?

Accepted Answer

A)  Balance sheet
B)  Income statement
C)  Statement of retained earnings
D)  Statement of cash flowsE) None of the above
F) A) and B)

Question 6

Which of the following is not considered to be a recordable transaction?

Accepted Answer

A)  Signing a contract to have an outside cleaning service clean offices nightly.
B)  Paying employees their wages.
C)  Selling stock to investors.
D)  Buying equipment and agreeing to pay a note payable and interest at the end of a year.E) B) and D)
F) B) and C)

Question 7

Which of the following transactions would result in an increase in the current ratio?

Accepted Answer

A)  Collection of cash from an account receivable.
B)  Selling shares of stock to stockholders in exchange for cash.
C)  Purchasing a building by signing a long-term note payable.
D)  Declaration of a cash dividend by the board of directors.E) B) and D)
F) B) and C)

Question 8

Which of the following liability accounts does not usually require a future cash payment?

Accepted Answer

A)  Accounts payable
B)  Unearned revenues
C)  Taxes payable
D)  Notes payableE) None of the above
F) A) and B)

Question 9

The accounting equation doesn't have to be in balance after the recording of each transaction.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Accepted Answer

A)  Assets and liabilities each increased $200,000.
B)  Assets and revenues each increased $200,000.
C)  Stockholders' equity and revenues each increased $200,000.
D)  Stockholders' equity and assets each increased $200,000.E) B) and C)
F) C) and D) D

Question 11

Describe the general journal and the general ledger.

Accepted Answer

The answer of Describe the general journal and the general...

Question 12

Which of the following describes the primary objective of financial accounting?

Accepted Answer

A)  To provide useful economic information only to stockholders.
B)  To provide information about a business' future business strategies.
C)  To provide useful economic information about a business to help external parties make informed decisions.
D)  To provide useful economic information about a business to help internal parties make informed decisions.E) A) and D)
F) A) and B) C

Question 13

Which of the following statements does not properly describe the current ratio?

Accepted Answer

A)  It measures the ability of a firm to pay its debts in the short-run.
B)  It is current assets divided by current liabilities.
C)  It is a measure of a firm's short-run liquidity.
D)  It measures a firm's ability to pay its long-term debts as they mature.E) C) and D)
F) B) and C)

Question 14

Which of the following describes the impact of paying a current liability using cash on the balance sheet?

Accepted Answer

A)  Current assets will decrease.
B)  Current liabilities will increase.
C)  Stockholders' equity will decrease.
D)  Total assets will remain the same.E) B) and D)
F) None of the above

Question 15

Liability and stockholders' equity accounts have credit balances and are decreased by debiting the account.

Accepted Answer

A) True 
 B)False

Question 16

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Accepted Answer

A) True 
 B)False  True

Question 17

Asset accounts have a debit balance and are increased by debiting the account.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following transactions would create a cash inflow from a financing activity?

Accepted Answer

A)  Issuing shares of stock to stockholders in exchange for cash.
B)  Selling a short-term stock investment in exchange for cash.
C)  Selling used equipment which was a part of property, plant, and equipment.
D)  The payment of an account payable.E) None of the above
F) C) and D)

Question 19

On January 1,2011,Dr.Beth Hill started a new professional corporation,Beth Hill,P.C.,to practice medicine with an initial investment of $100,000.On June 30,2011,the accounting records showed the following amounts:
 $$\begin{array} { l l } 
\text { Accounts Payable } & \$ 2,000 \
\text { Accounts Receivable } & \$ 6,200 \
\text { Cash } & \$ 48,100 \
\text { Contributed Capital } & \$ 100,000 \
\text { Office Equipment } & \$ 60,000 \
\text { Office Supplies } & \$ 3,500 \
\text { Retained Earnings } & \$ 5,800 \
\text { Notes Payable } & \$ 10,000
\end{array}$$ Requirement:
Prepare a balance sheet as of June 30,2011.

Accepted Answer

The answer of On January 1,2011,Dr.Beth Hill started a new...

Question 20

Which of the following would not be currently reported as an expense on the income statement?

Accepted Answer

A)  Cost of goods sold
B)  Interest expense
C)  Prepaid insurance expense
D)  Income tax expenseE) A) and D)
F) A) and C)

Exam 2: Investing and Financing Decisions and the Balance Sheet

Which of the following transactions wouldn't be considered an external exchange?

Correct Answer
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Correct Answer
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Which of the following journal entries is correct when a business entity issues stock to stockholders in exchange for cash?

Correct Answer
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How is the current ratio calculated and what does it measure?

Correct Answer
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Assets,liabilities,and stockholders' equity are found within which of the following financial statements?

Correct Answer
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Which of the following is not considered to be a recordable transaction?

Correct Answer
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Which of the following transactions would result in an increase in the current ratio?

Correct Answer
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Which of the following liability accounts does not usually require a future cash payment?

Correct Answer
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The accounting equation doesn't have to be in balance after the recording of each transaction.

Correct Answer
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Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Correct Answer
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D

Describe the general journal and the general ledger.

Correct Answer
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Which of the following describes the primary objective of financial accounting?

Correct Answer
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C

Which of the following statements does not properly describe the current ratio?

Correct Answer
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Which of the following describes the impact of paying a current liability using cash on the balance sheet?

Correct Answer
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Liability and stockholders' equity accounts have credit balances and are decreased by debiting the account.

Correct Answer
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Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Correct Answer
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True

Asset accounts have a debit balance and are increased by debiting the account.

Correct Answer
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Which of the following transactions would create a cash inflow from a financing activity?

Correct Answer
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Correct Answer
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Which of the following would not be currently reported as an expense on the income statement?

Correct Answer
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Exam 2: Investing and Financing Decisions and the Balance Sheet

Which of the following transactions wouldn't be considered an external exchange?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following journal entries is correct when a business entity issues stock to stockholders in exchange for cash?

Correct AnswerverifiedShow Answer

How is the current ratio calculated and what does it measure?

Correct AnswerverifiedShow Answer

Assets,liabilities,and stockholders' equity are found within which of the following financial statements?

Correct AnswerverifiedShow Answer

Which of the following is not considered to be a recordable transaction?

Correct AnswerverifiedShow Answer

Which of the following transactions would result in an increase in the current ratio?

Correct AnswerverifiedShow Answer

Which of the following liability accounts does not usually require a future cash payment?

Correct AnswerverifiedShow Answer

The accounting equation doesn't have to be in balance after the recording of each transaction.

Correct AnswerverifiedShow Answer

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?

Correct AnswerverifiedD

Describe the general journal and the general ledger.

Correct AnswerverifiedShow Answer

Which of the following describes the primary objective of financial accounting?

Correct AnswerverifiedC

Which of the following statements does not properly describe the current ratio?

Correct AnswerverifiedShow Answer

Which of the following describes the impact of paying a current liability using cash on the balance sheet?

Correct AnswerverifiedShow Answer

Liability and stockholders' equity accounts have credit balances and are decreased by debiting the account.

Correct AnswerverifiedShow Answer

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Correct AnswerverifiedTrue

Asset accounts have a debit balance and are increased by debiting the account.

Correct AnswerverifiedShow Answer

Which of the following transactions would create a cash inflow from a financing activity?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would not be currently reported as an expense on the income statement?

Correct AnswerverifiedShow Answer

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D

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C

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True

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