Question 1

During its first year of operations,a company entered into the following transactions: Borrowed $20,000 from the bank by signing a promissory note.
Issued stock to owners for $40,000.
Purchased $4,000 of supplies on account.
Paid $1,600 to suppliers as payment on account for the supplies purchased.
What is the amount of total liabilities at the end of the year?

Accepted Answer

A)  $24,000
B)  $62,400
C)  $64,000
D)  $22,400E) None of the above
F) All of the above

Question 2

Within the debit/credit framework,the best interpretation of the word "credit" is:

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

Question 3

Assets are listed on a classified balance sheet:

Accepted Answer

A)  in alphabetical order.
B)  from the largest dollar amount to the lowest dollar amount.
C)  beginning with noncurrent assets and ending with current assets.
D)  beginning with current assets and starting with Cash.E) A) and B)
F) None of the above

Question 4

When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Accepted Answer

A)  The asset is debited for the amount paid plus the amount owed.
B)  The asset is debited for the amount paid.The amount owed will be debited to the asset once paid.
C)  The asset is credited for the amount paid plus the amount owed.
D)  The asset is credited for the amount paid.The amount owed will be debited to the asset once paid.E) A) and B)
F) B) and C)

Question 5

The Accounts Payable account:

Accepted Answer

A)  has a normal credit balance.
B)  is increased by a debit.
C)  is an asset.
D)  is increased when a company receives cash from customers.E) B) and C)
F) C) and D)

Question 6

You are pleasantly surprised to discover that a popular actress appears on The Tonight Show wearing your company's jeans.Later,your company's sales increase by $500,000 as a result.When the actress appeared on TV,you would have recorded an asset because the TV appearance was expected to bring future economic benefits to your company.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an accounting transaction?

Accepted Answer

A)  A manager hires an employee.
B)  A manager orders supplies.
C)  A manager signs a promissory note and receives cash.
D)  A manager agrees to deliver their product in three weeks.E) A) and D)
F) B) and C)

Question 8

Debt financing is financing obtained from:

Accepted Answer

A)  stockholders.
B)  creditors.
C)  selling goods or services on credit.
D)  both creditors and stockholders.E) B) and C)
F) A) and D)

Question 9

Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Accepted Answer

A)  increase total assets.
B)  decrease total liabilities.
C)  decrease Common Stock.
D)  increase total assets and decrease total liabilities.E) None of the above
F) C) and D)

Question 10

Match each account name with the category that it would be included under in a classified balance sheet.
-Equipment

Accepted Answer

A)  NCA - Noncurrent Asset
B)  CL - Current Liability
C)  SE - Stockholders' Equity
D)  CA - Current AssetE) B) and C)
F) None of the above

Question 11

Park & Company was recently formed with a $25,000 investment in the company by stockholders in exchange for common stock.The company then borrowed $10,000 from a local bank,purchased $5,000 of supplies on account,and also purchased $25,000 of equipment by paying $10,000 in cash and signing a promissory note for the balance.Based on these transactions,the company's total assets are:

Accepted Answer

A)  $35,000.
B)  $45,000.
C)  $50,000.
D)  $55,000.E) A) and D)
F) None of the above

Question 12

Constable Co.reported the following information at December 31,Year 1:   Accounts Payable $,750 Accounts Receivable 14,025 Cash 35,235 Common Stock 135,000 Equipment 74,250 Inventory 46,800 Notes Payable due December 31, Year 3 3,750 Retained Earnings, December 31, Year 1 21,135 Wages Payable 3,675\begin{array}{lr}	ext { Accounts Payable } & \$, 750 \	ext { Accounts Receivable } & 14,025 \	ext { Cash } & 35,235 \	ext { Common Stock } & 135,000 \	ext { Equipment } & 74,250 \	ext { Inventory } & 46,800 \	ext { Notes Payable due December 31, Year 3 } & 3,750 \	ext { Retained Earnings, December 31, Year 1 } & 21,135 \	ext { Wages Payable } & 3,675\end{array} Accounts Payable  Accounts Receivable  Cash  Common Stock  Equipment  Inventory  Notes Payable due December 31, Year 3  Retained Earnings, December 31, Year 1  Wages Payable ​$,75014,02535,235135,00074,25046,8003,75021,1353,675​  What is the amount of current assets on the classified balance sheet?

Accepted Answer

A)  $170,310
B)  $96,060
C)  $49,260
D)  $123,255 E) B) and D)
F) None of the above

Question 13

Consider the following journal entry:   Software 18,000 Cash 7,200 Note Payable 10,800\begin{array} { c r r } 	ext { Software } & 18,000 & \\quad 	ext { Cash } & & 7,200 \	ext { Note Payable } & & 10,800\end{array} Software  Cash  Note Payable ​18,000​7,20010,800​  Which of the following explanations best describes this journal entry?

Accepted Answer

A)  The company buys $18,000 of software,pays cash of $7,200,and signs a note for $10,800.
B)  The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software.
C)  The company buys $18,000 of software,pays $7,200 cash,and promises to cancel a debt owed to the company in the amount of $10,800.
D)  The company sells $18,000 of software,receives $7,200 in cash,and pays off $10,800 it owes on the software. E) All of the above
F) A) and C)

Question 14

Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts:  What is the balance of the credit column on Broadway's trial balance?

Accepted Answer

A)  $241,200
B)  $120,600
C)  $90,600
D)  $90,000E) B) and D)
F) A) and B)

Question 15

Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

Accepted Answer

A)  Accounts Receivable
B)  Notes Payable
C)  Salaries Expense
D)  Accounts PayableE) A) and B)
F) A) and C)

Question 16

Which of the following statements about the debit/credit framework is correct?

Accepted Answer

A)  Asset and liability accounts have a normal debit balance.
B)  To debit an account means to increase it.
C)  Common Stock has a normal credit balance.
D)  To credit an account means to decrease it.E) A) and C)
F) C) and D)

Question 17

Which account would be decreased with a credit?

Accepted Answer

A)  Retained Earnings
B)  Accounts Receivable
C)  Common Stock
D)  Notes PayableE) A) and B)
F) B) and C)

Question 18

If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

Accepted Answer

A) True 
 B)False

Question 19

For each of the following,indicate how the event would most likely be categorized.
-A company receives $1 million in orders but no down payments.

Accepted Answer

A)  NT - No Transaction
B)  EE - External Exchange
C)  IE - Internal EventD) B) and C)
E) All of the above

Question 20

Which of the following requires a credit?

Accepted Answer

A)  Decreases in liabilities
B)  Decreases in stockholders' equity
C)  Increases to assets
D)  Increases to liabilitiesE) B) and D)
F) B) and C)

Exam 2: The Balance Sheet

Which of the following is an accounting transaction?

Correct Answer
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Assets are listed on a classified balance sheet:

Correct Answer
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The Accounts Payable account:

Correct Answer
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When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Correct Answer
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Consider the following journal entry: $\begin{array} { c r r } \text { Software } & 18,000 & \\\quad \text { Cash } & & 7,200 \\\text { Note Payable } & & 10,800\end{array}$ Which of the following explanations best describes this journal entry?

Correct Answer
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Match each account name with the category that it would be included under in a classified balance sheet. -Equipment

Correct Answer
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Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

Correct Answer
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Which of the following statements about the debit/credit framework is correct?

Correct Answer
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Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts: What is the balance of the credit column on Broadway's trial balance?

Correct Answer
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If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

Correct Answer
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Correct Answer
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Correct Answer
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Debt financing is financing obtained from:

Correct Answer
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Which of the following requires a credit?

Correct Answer
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Within the debit/credit framework,the best interpretation of the word "credit" is:

Correct Answer
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For each of the following,indicate how the event would most likely be categorized. -A company receives $1 million in orders but no down payments.

Correct Answer
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Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Correct Answer
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Which account would be decreased with a credit?

Correct Answer
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Exam 2: The Balance Sheet

Which of the following is an accounting transaction?

Correct AnswerverifiedShow Answer

Assets are listed on a classified balance sheet:

Correct AnswerverifiedShow Answer

The Accounts Payable account:

Correct AnswerverifiedShow Answer

When a company purchases an asset but only pays for a portion of it and owes the remainder,which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Match each account name with the category that it would be included under in a classified balance sheet. -Equipment

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would a company be most likely to overstate if the company was trying to mislead potential creditors as to its ability to pay debts as they become due?

Correct AnswerverifiedShow Answer

Which of the following statements about the debit/credit framework is correct?

Correct AnswerverifiedShow Answer

Broadway,Inc.'s trial balance was in balance at the end of the period and showed the following accounts: What is the balance of the credit column on Broadway's trial balance?

Correct AnswerverifiedShow Answer

If total assets decrease,then either total liabilities or total stockholders' equity must also decrease.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Debt financing is financing obtained from:

Correct AnswerverifiedShow Answer

Which of the following requires a credit?

Correct AnswerverifiedShow Answer

Within the debit/credit framework,the best interpretation of the word "credit" is:

Correct AnswerverifiedShow Answer

For each of the following,indicate how the event would most likely be categorized. -A company receives $1 million in orders but no down payments.

Correct AnswerverifiedShow Answer

Puffin,Inc.purchased land costing $54,000 by paying cash of $13,500 and signing a 90-day note for the balance.The entry to record this transaction would:

Correct AnswerverifiedShow Answer

Which account would be decreased with a credit?

Correct AnswerverifiedShow Answer

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