Question 1

The Demand Company buys $30,000 of equipment and funds half the purchase through liquidating common shares that it owns,while incurring an informal promise to pay the remainder at the end of the month.What is the impact of this transaction on the basic accounting equation?

Accepted Answer

A)  Only the left-hand side is impacted.
B)  Only the right-hand side is impacted.
C)  Both sides are impacted and the right-hand side equals the left-hand side.
D)  Both sides are impacted and the right-hand side does not equal the left-hand side.E) A) and B)
F) B) and C)

Question 2

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Accepted Answer

A)  $2,300.
B)  $71,200.
C)  $66,700.
D)  $(2,300) . E) A) and D)
F) All of the above

Question 3

Signing a rental agreement results in an activity that has a direct and measurable financial effect on the company.

Accepted Answer

A) True 
 B)False

Question 4

In part,a transaction affects the accounting equation as follows: Which of the following must be true for this transaction to keep the accounting equation in balance?

Accepted Answer

A)  If other assets remain the same,shareholders' equity must increase.
B)  If other assets remain the same,shareholders' equity must remain the same.
C)  If shareholders' equity remains the same,another asset must decrease.
D)  If shareholders' equity remains the same,all other assets must remain the same.E) A) and B)
F) A) and D)

Question 5

According to the accounting equation,ceteris paribus,which of the following could offset an increase in profits so as to maintain equality?

Accepted Answer

A)  Dividends,common shares or liabilities decrease; alternatively,assets increase.
B)  Dividends or assets increase; alternatively,common shares or liabilities decrease.
C)  Dividends,assets,or common shares increase; alternatively,liabilities decrease.
D)  Dividends,assets,or liabilities increase; alternatively,common shares decrease.E) A) and B)
F) C) and D)

Question 6

If Accounts Payable had a balance of $18,200 at the beginning of the month,and the six amounts shown below were posted to this account,what should be the ending balance? Three debits posted to Accounts Payable this month: $4,700,$11,300,and $14,800.Three credits posted to Accounts Payable this month: $3,600,$9,500,and $12,700.

Accepted Answer

A)  $13,200.
B)  $5,000.
C)  $23,200.
D)  $49,000.E) B) and D)
F) B) and C)

Question 7

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

Accepted Answer

A)  equal to zero.
B)  equal to contributed capital.
C)  equal to shareholders' equity.
D)  equal to the negative of liabilities.E) B) and C)
F) A) and B)

Question 8

According to the cost principle,assets are valued at their replacement cost.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true?

Accepted Answer

A)  Assets have debit balances and liabilities have credit balances.
B)  Assets and liabilities have credit balances.
C)  Assets have credit balances and liabilities have debit balances.
D)  Assets and liabilities have debit balances.E) B) and D)
F) A) and C)

Question 10

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

Accepted Answer

A)  This is an internal unobservable event so it does  not\bold{not}not  affect the balance sheet.
B)  This is an external unobservable event so it does  not\bold{not}not  affect the balance sheet.
C)  This is an internal observable event that affects the balance sheet.
D)  This is an external observable event that affects the balance sheet. E) None of the above
F) A) and D)

Question 11

In performing some due diligence with respect to the work of your new bookkeeper,you notice that a debit posting for prepaid rent of $900 was mistakenly recorded as a debit to rent expense.Furthermore,a debit to salary expense,which was supposed to be recorded as 754,instead got recorded as $745.What impact will these two transactions have on debits and credits in trial balance?

Accepted Answer

The Trial Balance cr...

Question 12

To maintain consistency,the accounting profession requires companies to use the same chart of accounts,whether operating under IFRS or ASPE.

Accepted Answer

A) True 
 B)False

Question 13

The basic accounting equation can be represented as:

Accepted Answer

A)  A = L + SE
B)  SE = A - L
C)  A - SE = L
D)  All of these choices are correct.E) None of the above
F) All of the above

Question 14

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount.

Accepted Answer

A) True 
 B)False

Question 15

Your company has just sold some inventory.What impact does this have on the company's current ratio?

Accepted Answer

A)  There is no impact; the current ratio remains the same.
B)  The current ratio will increase as a result of sale.
C)  The current ratio will decline as a result of the sale.
D)  More information is needed to determine the impact.E) A) and C)
F) B) and D)

Question 16

During the month you purchased $12,000 of supplies on credit and $19,000 of equipment for cash.When you prepare a balance sheet,assets are $24,000 more than liabilities plus shareholders' equity.

Accepted Answer

A)  You may have posted the increase in supplies as a credit rather than a debit.
B)  You may have neglected to post the change in accounts payable.
C)  You may have posted the increase in accounts payable as a debit rather than a credit.
D)  All would have resulted in the $24,000 error.E) A) and B)
F) A) and C)

Question 17

If a company borrows money from a bank and signs an agreement to repay the loan several years from now,in which account would the company report the amount borrowed?

Accepted Answer

A)  Contributed Capital
B)  Accounts Payable
C)  Notes Payable
D)  Bonds PayableE) A) and B)
F) All of the above

Question 18

The two sources of financing available to businesses are known as,

Accepted Answer

A)  common and preferred shares.
B)  common shares and loans.
C)  equity and liabilities.
D)  equity and debt.E) A) and D)
F) C) and D)

Question 19

Which of the following describes the classification and normal balance of the retained earnings account?

Accepted Answer

A)  Asset,debit
B)  Shareholders' equity,credit
C)  Liability,credit
D)  Shareholders' equity,debitE) B) and D)
F) A) and D)

Question 20

Which of the following statements is not true?

Accepted Answer

A)  Assets must always equal liabilities plus shareholders' equity.
B)  The total value of credits in all accounts must always equal the total value of debits in all accounts.
C)  The net changes in assets must always equal the sum of the net changes in liabilities and shareholders' equity.
D)  The number of credits posted must equal to number of debits posted.E) B) and C)
F) None of the above

Exam 2: The Balance Sheet

Correct Answer
verified

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

Correct Answer
verified

According to the accounting equation,ceteris paribus,which of the following could offset an increase in profits so as to maintain equality?

Correct Answer
verified

During the month you purchased $12,000 of supplies on credit and $19,000 of equipment for cash.When you prepare a balance sheet,assets are $24,000 more than liabilities plus shareholders' equity.

Correct Answer
verified

Signing a rental agreement results in an activity that has a direct and measurable financial effect on the company.

Correct Answer
verified

The basic accounting equation can be represented as:

Correct Answer
verified

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

Correct Answer
verified

Your company has just sold some inventory.What impact does this have on the company's current ratio?

Correct Answer
verified

To maintain consistency,the accounting profession requires companies to use the same chart of accounts,whether operating under IFRS or ASPE.

Correct Answer
verified

According to the cost principle,assets are valued at their replacement cost.

Correct Answer
verified

In part,a transaction affects the accounting equation as follows: Which of the following must be true for this transaction to keep the accounting equation in balance?

Correct Answer
verified

The Demand Company buys $30,000 of equipment and funds half the purchase through liquidating common shares that it owns,while incurring an informal promise to pay the remainder at the end of the month.What is the impact of this transaction on the basic accounting equation?

Correct Answer
verified

Which of the following describes the classification and normal balance of the retained earnings account?

Correct Answer
verified

The two sources of financing available to businesses are known as,

Correct Answer
verified

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount.

Correct Answer
verified

If a company borrows money from a bank and signs an agreement to repay the loan several years from now,in which account would the company report the amount borrowed?

Correct Answer
verified

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Correct Answer
verified

Which of the following statements is not true?

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

Correct Answer
verified
The Trial Balance cr...
View Answer

Exam 2: The Balance Sheet

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the accounting equation,ceteris paribus,which of the following could offset an increase in profits so as to maintain equality?

Correct AnswerverifiedShow Answer

During the month you purchased $12,000 of supplies on credit and $19,000 of equipment for cash.When you prepare a balance sheet,assets are $24,000 more than liabilities plus shareholders' equity.

Correct AnswerverifiedShow Answer

Signing a rental agreement results in an activity that has a direct and measurable financial effect on the company.

Correct AnswerverifiedShow Answer

The basic accounting equation can be represented as:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Your company has just sold some inventory.What impact does this have on the company's current ratio?

Correct AnswerverifiedShow Answer

To maintain consistency,the accounting profession requires companies to use the same chart of accounts,whether operating under IFRS or ASPE.

Correct AnswerverifiedShow Answer

According to the cost principle,assets are valued at their replacement cost.

Correct AnswerverifiedShow Answer

In part,a transaction affects the accounting equation as follows: Which of the following must be true for this transaction to keep the accounting equation in balance?

Correct AnswerverifiedShow Answer

The Demand Company buys $30,000 of equipment and funds half the purchase through liquidating common shares that it owns,while incurring an informal promise to pay the remainder at the end of the month.What is the impact of this transaction on the basic accounting equation?

Correct AnswerverifiedShow Answer

Which of the following describes the classification and normal balance of the retained earnings account?

Correct AnswerverifiedShow Answer

The two sources of financing available to businesses are known as,

Correct AnswerverifiedShow Answer

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount.

Correct AnswerverifiedShow Answer

If a company borrows money from a bank and signs an agreement to repay the loan several years from now,in which account would the company report the amount borrowed?

Correct AnswerverifiedShow Answer

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Correct AnswerverifiedShow Answer

Which of the following statements is not true?

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe Trial Balance cr...View AnswerShow Answer

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Correct Answer
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Correct Answer
verified
The Trial Balance cr...
View Answer