Question 1

The income statement for August indicates net income of $50,000.The corporation also paid $10,000 in dividends during the same period.If there was no beginning balance in stockholders' equity,what is the ending balance in stockholders' equity?

Accepted Answer

A)  $40,000
B)  $50,000
C)  $10,000
D)  $60,000E) None of the above
F) B) and C)

Question 2

Flow,Inc.received cash from fees earned.How does this transaction affect the Statement of Cash Flows?

Accepted Answer

A)  Increase cash from Operating Activities
B)  Increase cash from Investing Activities
C)  Increase cash from Financing Activities
D)  No effect on the Statement of Cash FlowsE) A) and B)
F) None of the above

Question 3

For EFG Co. ,the transaction "Payment to creditors" would

Accepted Answer

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

Question 4

For EFG Co. ,the transaction "Purchase of store equipment with a note payable" 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) B) and C)

Question 5

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) C) and D)

Question 6

Exhibit 2-1
 
-Refer to Exhibit 2-1.What is net income,assuming no stock was issued and dividends of $25,000 were paid?

Accepted Answer

A)  $110,000
B)  $150,000
C)  $160,000
D)  $200,000E) All of the above
F) None of the above

Question 7

Johnson,Inc.purchased land for cash.What effect does this transaction have on the following accounts:

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) C) and D)
F) B) and D)

Question 8

Which of the following will increase stockholders' equity?

Accepted Answer

A)  Expenses > revenues
B)  Owner investment
C)  Accounts payable
D)  DividendsE) None of the above
F) A) and D)

Question 9

Gibbs Company has $16,000 in Retained Earnings,$27,000 in Assets,and $5,000 in Liabilities.How much is in Common Stock?

Accepted Answer

A)  $22,000
B)  $16,000
C)  $11,000
D)  $6,000E) A) and B)
F) All of the above

Question 10

The payment of a liability

Accepted Answer

A)  decreases assets and stockholders' equity.
B)  increases assets and decreases liabilities.
C)  decreases assets and increases liabilities.
D)  decreases assets and decreases liabilities.E) A) and B)
F) B) and D)

Question 11

For EFG Co. ,the transaction "Payment of interest expense" would

Accepted Answer

A)  increase total assets.
B)  decrease total assets.
C)  have no effect on total assets.
D)  increase stockholders' equity.E) C) and D)
F) None of the above

Question 12

When an account receivable is collected in cash,the total assets of the business increase.

Accepted Answer

A) True 
 B)False

Question 13

An increase in Stockholders' Equity from revenues earned will also result in an increase in

Accepted Answer

A)  liabilities.
B)  assets.
C)  expenses.
D)  cash flow from financing activities.E) C) and D)
F) None of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following situations increase stockholders' equity?

Accepted Answer

A)  Supplies are purchased on account.
B)  Services are provided on account.
C)  Cash is received from customers.
D)  Utility bill will be paid next month.E) B) and C)
F) A) and D)

Question 16

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) A) and D)
F) A) and C)

Question 17

A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

Accepted Answer

A)  framework
B)  control
C)  set of rules
D)  transactionE) None of the above
F) A) and B)

Question 18

When an accounts payable account is paid in cash,the stockholders' equity in the business increases.

Accepted Answer

A) True 
 B)False

Question 19

If a $15,000 purchase of equipment for cash is incorrectly recorded as an increase to equipment and as an increase to cash,at the end of the period assets will

Accepted Answer

A)  exceed liabilities and stockholders' equity by $15,000.
B)  equal liabilities and stockholders' equity.
C)  exceed liabilities and stockholders' equity by $30,000.
D)  exceed liabilities and stockholders' equity by $40,000.E) A) and B)
F) B) and C)

Question 20

A to Z Corporation engaged in the following transaction "Paid a $10,000 cash dividend." 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) None of the above
F) C) and D)

Exam 2: Basic Accounting Concepts

An increase in Stockholders' Equity from revenues earned will also result in an increase in

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

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For EFG Co. ,the transaction "Purchase of store equipment with a note payable" would

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Exhibit 2-1 -Refer to Exhibit 2-1.What is net income,assuming no stock was issued and dividends of $25,000 were paid?

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Gibbs Company has $16,000 in Retained Earnings,$27,000 in Assets,and $5,000 in Liabilities.How much is in Common Stock?

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When an account receivable is collected in cash,the total assets of the business increase.

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Johnson,Inc.purchased land for cash.What effect does this transaction have on the following accounts:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A __________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded.

Correct AnswerverifiedShow Answer

For EFG Co. ,the transaction "Payment of interest expense" would

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Which of the following situations increase stockholders' equity?

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For EFG Co. ,the transaction "Payment to creditors" would

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The income statement for August indicates net income of $50,000.The corporation also paid $10,000 in dividends during the same period.If there was no beginning balance in stockholders' equity,what is the ending balance in stockholders' equity?

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A to Z Corporation engaged in the following transaction "Paid a $10,000 cash dividend." On the Statement of Cash Flows,the transaction would be classified as

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If a $15,000 purchase of equipment for cash is incorrectly recorded as an increase to equipment and as an increase to cash,at the end of the period assets will

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Flow,Inc.received cash from fees earned.How does this transaction affect the Statement of Cash Flows?

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Which of the following will increase stockholders' equity?

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When an accounts payable account is paid in cash,the stockholders' equity in the business increases.

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For EFG Co. ,the transaction "Payment of dividends" would

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The payment of a liability

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