Question 1

Exhibit 2-1
Total Assets Total Liabilities
Beginning of the year $300,000 $130,000
End of the year $800,000 $550,000
-Refer to Exhibit 2-1.Determine the net income (or loss) ,assuming no stock was issued and no dividends were paid?

Accepted Answer

A)  $420,000
B)  $250,000
C)  $80,000
D)  $170,000E) A) and B)
F) A) and C)

Question 2

Calculate the following:
(a)	Determine the cash receipts for May based on the following data:

(b)	Determine the cash received from customers on account during May based on the following data:

Accepted Answer

(a)$44,750 ($6,000 +...

Question 3

A transaction can affect at most two elements of the accounting equation.

Accepted Answer

A) True 
 B)False

Question 4

For EFG Co.,the transaction "purchase of store equipment with cash" would:

Accepted Answer

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

Question 5

A to Z Corporation 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) A) and D)
F) A) and B)

Question 6

Which of the following statements is true about liabilities?

Accepted Answer

A)  Liabilities include insurance premium paid in advance.
B)  Liabilities arise when a company sells goods on account.
C)  Liabilities equal assets plus stockholders' equity.
D)  Liabilities are the debt owed by a company.E) A) and B)
F) A) and D)

Question 7

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 C)
F) None of the above

Question 8

For EFG Co.,the transaction "cash sales to customers at a profit" 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 D)
F) A) and B)

Question 9

Anthony,Inc.buys land for $50,000 cash.The net effect on assets is:

Accepted Answer

A)  $50,000 increase.
B)  $0.
C)  $50,000 decrease.
D)  $25,000 increase.E) None of the above
F) A) and D)

Question 10

A common­sized balance sheet is prepared by expressing each stockholders' equity item as a percent of:

Accepted Answer

A)  total sales.
B)  total liabilities plus stockholders' equity.
C)  total stockholders' equity.
D)  total liabilities.E) B) and D)
F) All of the above

Question 11

Which of the following will increase stockholders' equity?

Accepted Answer

A)  Expenses > revenues
B)  Owners' investment
C)  Accounts payable
D)  Dividends paidE) None of the above
F) B) and D)

Question 12

The statement of cash flows is integrated with the balance sheet because:

Accepted Answer

A)  the cash at the beginning of the period plus or minus the cash flows from operating,investing,and financing activities equals the end of period cash reported on the balance sheet.
B)  the cash at the beginning of the period plus or minus the net income equals the end of period cash reported on the balance sheet.
C)  the cash at the beginning of the period plus or minus assets and liabilities equals the end of period cash reported on the balance sheet.
D)  the cash at the beginning of the period plus or minus the cash flows from operating activities equals the end of period cash reported on the balance sheet.E) A) and D)
F) A) and C)

Question 13

Cash receipts from cash sales affects which financial statement elements?

Accepted Answer

A)  Assets only
B)  Stockholders' equity only
C)  Assets and stockholders' equity
D)  Assets and liabilitiesE) A) and B)
F) C) and D)

Question 14

Stockholders' equity will be increased by:

Accepted Answer

A)  increase in revenues.
B)  increase in expenses.
C)  payment of dividends.
D)  issuance of bonds.E) C) and D)
F) B) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Explain how the four financial statements are linked.

Accepted Answer

A financial accounting system is designe...

Question 17

Buying equipment for cash affects which account/ accounts?

Accepted Answer

A)  Cash only
B)  Retained earnings only
C)  Equipment and retained earnings
D)  Cash and equipmentE) A) and B)
F) A) and C)

Question 18

Any given transaction must affect at least two different parts of the accounting equation.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 2-1
Total Assets Total Liabilities
Beginning of the year $300,000 $130,000
End of the year $800,000 $550,000
-Refer to Exhibit 2-1.Determine the net income (or loss) ,assuming $50,000 of stock was issued and $40,000 of dividends were paid?

Accepted Answer

A)  $70,000
B)  $210,000
C)  $260,000
D)  $10,000E) B) and C)
F) C) and D)

Question 20

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) A) and C)
F) B) and C)

Exam 2: Basic Accounting Concepts

Any given transaction must affect at least two different parts of the accounting equation.

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

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Buying equipment for cash affects which account/ accounts?

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Exhibit 2-1 Total Assets Total Liabilities Beginning of the year $300,000 $130,000 End of the year $800,000 $550,000 -Refer to Exhibit 2-1.Determine the net income (or loss) ,assuming no stock was issued and no dividends were paid?

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A transaction can affect at most two elements of the accounting equation.

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Which of the following will increase stockholders' equity?

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For EFG Co.,the transaction "purchase of store equipment with cash" would:

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Stockholders' equity will be increased by:

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Which of the following statements is true about liabilities?

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Calculate the following: (a) Determine the cash receipts for May based on the following data: (b) Determine the cash received from customers on account during May based on the following data:

Correct Answerverified(a)$44,750 ($6,000 +...View AnswerShow Answer

For EFG Co.,the transaction "payment to creditors" would:

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Cash receipts from cash sales affects which financial statement elements?

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Explain how the four financial statements are linked.

Correct AnswerverifiedA financial accounting system is designe...View AnswerShow Answer

For EFG Co.,the transaction "cash sales to customers at a profit" would:

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A to Z Corporation paid a $10,000 cash dividend.On the Statement of Cash Flows,the transaction would be classified as:

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The statement of cash flows is integrated with the balance sheet because:

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Exhibit 2-1 Total Assets Total Liabilities Beginning of the year $300,000 $130,000 End of the year $800,000 $550,000 -Refer to Exhibit 2-1.Determine the net income (or loss) ,assuming $50,000 of stock was issued and $40,000 of dividends were paid?

Correct AnswerverifiedShow Answer

A common­sized balance sheet is prepared by expressing each stockholders' equity item as a percent of:

Correct AnswerverifiedShow Answer

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

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Anthony,Inc.buys land for $50,000 cash.The net effect on assets is:

Correct AnswerverifiedShow Answer

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(a)$44,750 ($6,000 +...
View Answer

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A financial accounting system is designe...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A commonsized balance sheet is prepared by expressing each stockholders' equity item as a percent of:

Correct Answer
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Correct Answer
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Correct Answer
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