Question 1

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Accepted Answer

A) True 
 B)False

Question 2

An asset account normally has a debit balance and is increased by debiting the account.

Accepted Answer

A) True 
 B)False

Question 3

Many valuable assets such as trademarks and copyrights are not reported on a company's balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would not be considered a current asset?

Accepted Answer

A)   Inventory.
B)   Prepaid expenses.
C)  Land used in daily operations.
D)  Accounts receivable.E) B) and C)
F) A) and D)

Question 5

The accounting equation does not have to be in balance after the recording of each transaction.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following events will cause retained earnings to increase?

Accepted Answer

A)   Dividends declared by the Board of Directors.
B)   Net income reported for the period.
C)  Net loss reported for the period.
D)  Issuance of stock in exchange for cash.E) All of the above
F) None of the above

Question 7

A company's January 1, 2014 balance sheet reported total assets of $120,000 and total liabilities of $40,000. During January 2014, the following transactions occurred: (A)  the company issued stock and collected cash totaling $30,000; (B)  the company paid an account payable of $6,000; (C)  the company purchased supplies for $1,000 with cash; (D)  the company purchased land for $60,000 paying $10,000 with cash and signing a note payable for the balance. What is total stockholders' equity after the transactions above?

Accepted Answer

A)   $30,000.
B)   $110,000.
C)  $80,000.
D)  $194,000.E) A) and B)
F) B) and D)

Question 8

Stockholders' equity reflects the financing provided by owners.

Accepted Answer

A) True 
 B)False

Question 9

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Accepted Answer

A) True 
 B)False

Question 10

Purchasing supplies for cash results in an increase in total assets for the purchasing company.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true?

Accepted Answer

A)   Contributed capital is a noncurrent asset.
B)   Current liabilities are debts expected to be paid within the next year.
C)  Current assets are resources of a company that might include cash and copyrights.
D)  Patents, copyrights, and research and development expense are classified as intangible assets on the balance sheet.E) A) and B)
F) B) and C)

Question 12

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Accepted Answer

A)   A debit to retained earnings and a credit to cash.
B)   A debit to additional paid-in capital and a credit to dividends payable.
C)  A debit to cash and a credit to retained earnings.
D)  A debit to retained earnings and a credit to dividends payable.E) A) and B)
F) B) and C)

Exam 2: Investing and Financing Decisions and the Accounting System

The accounting equation does not have to be in balance after the recording of each transaction.

Correct Answer
verified

Many valuable assets such as trademarks and copyrights are not reported on a company's balance sheet.

Correct Answer
verified

Purchasing supplies for cash results in an increase in total assets for the purchasing company.

Correct Answer
verified

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Correct Answer
verified

Stockholders' equity reflects the financing provided by owners.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Correct Answer
verified

Which of the following would not be considered a current asset?

Correct Answer
verified

Which of the following events will cause retained earnings to increase?

Correct Answer
verified

An asset account normally has a debit balance and is increased by debiting the account.

Correct Answer
verified

Correct Answer
verified

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Correct Answer
verified

Exam 2: Investing and Financing Decisions and the Accounting System

The accounting equation does not have to be in balance after the recording of each transaction.

Correct AnswerverifiedShow Answer

Many valuable assets such as trademarks and copyrights are not reported on a company's balance sheet.

Correct AnswerverifiedShow Answer

Purchasing supplies for cash results in an increase in total assets for the purchasing company.

Correct AnswerverifiedShow Answer

Which of the following correctly describes the recording of a dividend declaration by a company's board of directors?

Correct AnswerverifiedShow Answer

Stockholders' equity reflects the financing provided by owners.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

Correct AnswerverifiedShow Answer

Which of the following would not be considered a current asset?

Correct AnswerverifiedShow Answer

Which of the following events will cause retained earnings to increase?

Correct AnswerverifiedShow Answer

An asset account normally has a debit balance and is increased by debiting the account.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In order for information to be relevant, the information needs to be complete, neutral, and free from error.

Correct AnswerverifiedShow Answer

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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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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