Question 1

Which of the following scenarios could explain the journal entry below?

Accepted Answer

A)  The company buys $10,000 of equipment for $4,000 in cash and $6,000 on credit.
B)  The company pays $4,000 in cash and $6,000 in notes payable to buy $10,000 of equipment.
C)  The company sells $10,000 of equipment,for $4,000 in cash and $6,000 on credit.
D)  The company sells $10,000 of equipment,for $4,000 in cash and pays off $6,000 it owes on the equipment.E) A) and C)
F) None of the above

Question 2

If a $100 debit is erroneously posted to an account as a $100 credit,the accounts will be out of balance by $100.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 3

Match the transaction with the appropriate T-account entry,debit (dr)or credit (cr).
_____ Decrease in Wages Payable.
_____ Increase in Cash.
_____ Increase in Accounts Payable.
_____ Decrease in Notes Payable.
_____ Increase in Inventory.
_____ Increase in Contributed Capital.
_____ Decrease in Accrued Liabilities.
_____ Decrease in Property and Equipment.

Accepted Answer

dr,dr,cr,d...

Question 4

A company issues $20 million in new stock.It later uses this money to pay off promissory notes.How many different accounts and which account names are affected by these two transactions?

Accepted Answer

A)  3 accounts are affected: contributed capital,cash,and notes payable.
B)  4 accounts are affected: contributed capital,cash,liabilities,and accounts payable.
C)  3 accounts are affected: cash,assets,and accounts payable.
D)  3 accounts are affected: contributed capital,investments,and accounts payable.E) None of the above
F) B) and C)

Question 5

A transaction can cause only one account on the balance sheet to change.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would not be recorded as an identifiable accounting transaction?

Accepted Answer

A)  Putting a deposit down on a new vehicle.
B)  Hiring a new employee.
C)  Obtaining a bank loan.
D)  Receiving a deposit from a customer.E) B) and C)
F) None of the above

Question 7

A vitamin manufacturer combines ingredients when making its vitamin pills.This is an observable internal event.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 8

The current ratio is used to assess a company's ability to pay its current liabilities.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Question 9

A transaction is an exchange or event that directly affects the assets,liabilities,or shareholders' equity of a company.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Question 10

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 decrease.
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 C)

Question 11

In the T-account above: i) (a) and (b) are credits while (c) through (g) are debits.
Ii) (a) and (b) are increases while (c) through (g) are decreases.
Iii) (a) and (b) are debits while (c) through (g) are credits.
Iv) (a) and (b) are decreases while (c) through (g) are increases.
Which of the following pair is true?

Accepted Answer

A)  i and ii
B)  ii and iii
C)  i and iv
D)  iii and ivE) A) and B)
F) A) and D)

Question 12

If a company is paid $20,000 on accounts receivable and uses the money to pay $20,000 on accounts payable then:

Accepted Answer

A)  assets would increase by $20,000 while liabilities would decrease by $20,000.
B)  liabilities would decrease by $20,000 while shareholders' equity would increase by $20,000.
C)  Both assets and liabilities would decrease by $20,000.
D)  Both assets and shareholders' equity would decrease by $20,000.E) A) and B)
F) B) and C)

Question 13

If a company uses $100 million in cash to pay off debt,its shareholders' equity will increase by $100 million.
BT: Application

Accepted Answer

A) True 
 B)False

Question 14

The standard formatting for a journal entry:

Accepted Answer

A)  lists credits first and then debits,both aligned to the left.
B)  lists credits first and then debits,indented underneath.
C)  lists debits first and then credits,both aligned to the right.
D)  lists debits first and then credits,indented underneath.E) A) and D)
F) C) and D)

Question 15

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Accepted Answer

A)  $100,000 credit to Cash and a $100,000 debit to Notes Payable.
B)  $100,000 credit to Cash and a $100,000 credit to Notes Payable.
C)  $100,000 debit to Cash and a $100,000 credit to Notes Payable.
D)  $100,000 debit to Cash and a $100,000 debit to Notes Payable.E) A) and B)
F) A) and D)

Question 16

A current asset is one that:

Accepted Answer

A)  the company has owned for over one year.
B)  the company will use up or convert into cash in five years or more.
C)  the company will use up or convert into cash in one year or less.
D)  the company will use up or convert into cash in more than one year.E) None of the above
F) B) and C)

Question 17

The Buddy Burger Corporation owes $1.5 million to the Alberta Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Accepted Answer

A)  Unearned Revenue.
B)  Accounts Payable.
C)  Supplies.
D)  Accounts Receivable.E) A) and C)
F) All of the above

Question 18

The normal balance of any account is the:

Accepted Answer

A)  left side.
B)  right side.
C)  side which increases that account.
D)  side which decreases that account.E) All of the above
F) A) and B)

Question 19

For each of the following,indicate how the event would most likely be categorized.
OE (Observable External Event)
OI (Observable Internal Event)
UE (Unobservable Event)
NT (No transaction)
____ A company sells $2 million in goods for immediate payment.
____ The company uses up office supplies.
____ The stock market rises 10% and the value of a company's stock increases.
____ Each day the company owes more interest on a loan.
____ A company pays cash to an inventor for the legal rights to produce a new product.
____ Management pays workers an overtime bonus as required by their union contract.
____ A company uses up supplies to manufacture a product.
____ A company receives orders worth $1 million but no down payments.

Accepted Answer

OE,OI,NT,U...

Question 20

Transactions include which two types of events?

Accepted Answer

A)  Direct events and indirect events.
B)  Monetary events and production events.
C)  External exchanges and internal events.
D)  Current events and future events.E) A) and B)
F) None of the above

Exam 2: The Balance Sheet

Which of the following would not be recorded as an identifiable accounting transaction?

Correct Answer
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Correct Answer
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dr,dr,cr,d...
View Answer

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Correct Answer
verified

If a $100 debit is erroneously posted to an account as a $100 credit,the accounts will be out of balance by $100. BT: Comprehension

Correct Answer
verified

Correct Answer
verified
OE,OI,NT,U...
View Answer

If a company is paid $20,000 on accounts receivable and uses the money to pay $20,000 on accounts payable then:

Correct Answer
verified

A company issues $20 million in new stock.It later uses this money to pay off promissory notes.How many different accounts and which account names are affected by these two transactions?

Correct Answer
verified

Correct Answer
verified

A vitamin manufacturer combines ingredients when making its vitamin pills.This is an observable internal event. BT: Comprehension

Correct Answer
verified

A transaction is an exchange or event that directly affects the assets,liabilities,or shareholders' equity of a company. BT: Knowledge

Correct Answer
verified

If a company uses $100 million in cash to pay off debt,its shareholders' equity will increase by $100 million. BT: Application

Correct Answer
verified

Transactions include which two types of events?

Correct Answer
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A transaction can cause only one account on the balance sheet to change. BT: Comprehension

Correct Answer
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A current asset is one that:

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

Which of the following scenarios could explain the journal entry below?

Correct Answer
verified

The normal balance of any account is the:

Correct Answer
verified

The current ratio is used to assess a company's ability to pay its current liabilities. BT: Knowledge

Correct Answer
verified

The Buddy Burger Corporation owes $1.5 million to the Alberta Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Correct Answer
verified

The standard formatting for a journal entry:

Correct Answer
verified

Exam 2: The Balance Sheet

Which of the following would not be recorded as an identifiable accounting transaction?

Correct AnswerverifiedShow Answer

Correct Answerverifieddr,dr,cr,d...View AnswerShow Answer

A company uses $100,000 in cash to pay off $100,000 in notes payable.This would result in a:

Correct AnswerverifiedShow Answer

If a $100 debit is erroneously posted to an account as a $100 credit,the accounts will be out of balance by $100. BT: Comprehension

Correct AnswerverifiedShow Answer

Correct AnswerverifiedOE,OI,NT,U...View AnswerShow Answer

If a company is paid $20,000 on accounts receivable and uses the money to pay $20,000 on accounts payable then:

Correct AnswerverifiedShow Answer

A company issues $20 million in new stock.It later uses this money to pay off promissory notes.How many different accounts and which account names are affected by these two transactions?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A vitamin manufacturer combines ingredients when making its vitamin pills.This is an observable internal event. BT: Comprehension

Correct AnswerverifiedShow Answer

A transaction is an exchange or event that directly affects the assets,liabilities,or shareholders' equity of a company. BT: Knowledge

Correct AnswerverifiedShow Answer

If a company uses $100 million in cash to pay off debt,its shareholders' equity will increase by $100 million. BT: Application

Correct AnswerverifiedShow Answer

Transactions include which two types of events?

Correct AnswerverifiedShow Answer

A transaction can cause only one account on the balance sheet to change. BT: Comprehension

Correct AnswerverifiedShow Answer

A current asset is one that:

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

Which of the following scenarios could explain the journal entry below?

Correct AnswerverifiedShow Answer

The normal balance of any account is the:

Correct AnswerverifiedShow Answer

The current ratio is used to assess a company's ability to pay its current liabilities. BT: Knowledge

Correct AnswerverifiedShow Answer

The Buddy Burger Corporation owes $1.5 million to the Alberta Wholesale Meat Company from whom Buddy Burger buys its burger meat.Which account would Buddy Burger use to report the amount owed?

Correct AnswerverifiedShow Answer

The standard formatting for a journal entry:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
dr,dr,cr,d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
OE,OI,NT,U...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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