Accounting Chapter 2 example #27718

The basic financial statements do NOT include the a. income statement b. tax return c. balance sheet d. statement of cash flows

Which of the following is NOT an element of the financial accounting system? a. A set of rule for determining the recording of economic events b. A framework for preparing financial statements c. A set of rules for the stock exchange d. Controls to determine whether errors occur dudgeon recording

If a $15,000 purchase of equipment for cash is incorrectly recorded as an increase to equipment and as an increase to cash, at the end of the period assets will a. exceed liabilities and stockholders' equity by $15,000 b. equal liabilities and stockholders' equity c. exceed liabilities and stockholders' equity by $30,000 d. exceed liabilities and stockholders' equity by $40,000

Which of the following is NOT considered to be a liability? a. Note payable b. Accounts receivable c. Unearned revenues d. Accounts payable

Which of the following statements is NOT true about liabilities? a. liabilities are debts owed to outsiders b. account titles of liabilities often include the term "payable" c. cash received before services are performed is considered to be a liability d. liabilities do not inclue wages owed to employees of the company

Which of the following accounts is a stockholders' equity account? a. cash b. capital stock c. prepaid insurance d. accounts payable

Which of the following group of accounts are all assets a. cash, accounts payable, buildings b. accounts receivable, revenue, cash c. prepaid expenses, buildings, patents d. unearned revenues, prepaid expenses, cash

Which of the following would increase stockholders' equity? a. supplies are purchased on account b. services are provided on account c. cash is received from customers d. utility bill will be paid next month

Stockholders' Equity will be reduced by all of the following accounts EXCEPT: a. Revenues b. Expenses c. Dividends d. All of the above reduce Stockholders' Equity

Expenses can be defined as a. assets consumed b. services used in the process of generating revenues c. costs that have been incurred during the normal course of business d. all of these

The gross increases in stockholders' equity attributable to business activities are called a. assets b. liabilities c. revenues d. net income

The payment of $15,000 for expenses was recorded by Spears Co. as an increase in cash of $15,000 and a decrease in retained earnings of $15,000. What is the effect of this error on the accounting equation? a. Total assets will exceed total liabilities and stockholders' equity by $15,000. b. Total assets will exceed total liabilities and stockholders' equity by $30,000. c. Total assets will be less than total liabilities and stockholders' equity by $30,000. d. The error will not affect the accounting equation.

Which of the following will increase stockholders' equity? a. Expenses > Revenues b. Owner investment c. Accounts payable d. Dividends

A ________________ is an economic event that under generally accepted accounting principles affects an element of the financial statements and must be recorded a. framework b. control c. set of rules d. transaction

The statement of cash flows is integrated with the balance sheet because 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 the period cash reported on the balance sheet d. the cash at the beginning of the period plus or minus the cash flows from the operating activities equals the end of period cash reported on the balance sheet

Stockholders' equity

Hodges, Inc. had the following assets and liabilities: assets >>>> $56,327 liabilities >>>> $28,416 If assets increased by $3,914 and equity increased by $2,290, what is the increase of decrease in liabilities of Hodges?

Rush Corporation borrowed $25,000 from the bank. Which of the following accurately shows the effects of the transaction? a. Increase cash $25,000 and decrease note payable $25,000 b. Increase cash $25,000 and increase notes payable $25,000 c. Decrease cash $25,000 and decrease notes payable $25,000 d. Decrease cash $25,000 and increase notes payable $25,000

Flow, Inc. received cash from fees earned. How does this transaction affect the Statement of Cash Flows? a. Increase cash from Operating Activities b. Increase cash from Investing Activities c. Increase cash from Financing Activities d. No effect on the Statement of Cash Flows

Philip Corporation purchased equipement on account. What is the effect of this transaction? a. Cash will decrease and equipment will increase b. Total assets will remain unchanged c. Cash flow from Investing activities will decrease d. Total assets and total liabilities will both increase

Johnson, Inc. paid rent expense of $3,500 for the month of October. How are the accounts affected due to this transaction? a. Increase in cash $3,500 and increase in retained earnings of $3,500 b. Increase in cash $3,500 and decrease in retained earnings $3,500 c. Decrease in cash $3,500 and decrease in retained earnings $3,500 d. Decrease in cash $3,500 and increase in retained earnings $3,500

Johnson, Inc. purchased land for cash. What effect does this transaction have on the following accounts: a. Increase in Cash and decrease in Land b. Decrease in Cash and decrease in Land c. Increase in Cash and increase in Land d. Decrease in Cash and increase in Land

Johnson, Inc. issued $15,000 in capital stock in exchange for cash. What is the effect of this transaction? a. Total assets remain unchanged b. Cash flow from Financing Activities will increase c. Net income will increase d. Total retained earnings will increase

Johnson, Inc. receives $5,000 cash for fees earned. What is the effect of this transaction? a. total assets remain unchanged b. cash flow from financing activities will increase c. net income will increase d. retained earnings will remain unchanged

Stockholders' equity will be increased by all of the following accounts EXCEPT: a. dividends b. revenues c. owner investments d. all of the above increase stockholders' equity

ABC company deposited $20,000 in a bank account in return issuing shares in the corporation. This transaction would affect which two financial statements? a. assets and stockholders' equity b. assets and liabilities c. liabilities and stockholders' equity d. none of these

BNC company earns revenues and as a result collects cash. Which of the following financial statement elements are increased? a. cash only b. stockholders' equity only c. liabilities d. cash and stockholders' equity

DAF Company paid a utility bill of $300 and paid rent of $700 in December. By how much would these events reduce stockholders' equity? a. $300 b. $1,000 c. $400 d. $700

Declaring and paying cash dividends affects which balance sheet accounts? a. cash only b. stockholders' equity c. cash and stockholders' equity d. cash and capital stock

Which of the following transactions changes the mix of assets only? a. Paid for supplies with cash b. Borrowed money from Second National Bank c. Received money for fees earned d. Received a utility bill

If assets have a balance of $40,000 and Stockholders' Equity has a balance of $30,000, then Liabilities must have a balance of a. $50,000 b. $60,000 c. $70,000 d. $10,000

If liabilities have a balance of $10,000 and Stockholders' Equity has a balance of $60,000, then Assets must have a balance of a. $50,000 b. $60,000 c. $70,000 d. $10,000

Gibbs Company has $16,000 in Retained Earnings, $27,000 in Assets, and $5,000 in Liabilities. How much is in Common Stock? a. $22,000 b. $16,000 c. $11,000 d. $6,000

A to Z Corporation engaged in the following transaction "Paid $10,000 cash dividend. " On the Statement of Cash Flows, the transaction would be classified as: a. Cash Flows from Operating Activities. b. Cash Flows from Investing Activities. c. Cash Flows from Financing Activities. d. Noncash transaction.

A to Z Corporation engaged in the following transaction "Purchased a building for $80,000 cash." On the Statement of Cash Flows, the transaction would be classified as: a. Cash Flows from Operating Activities. b. Cash Flows from Investing Activities. c. Cash Flows from Financing Activities. d. Noncash transaction.

A to Z Corporation engaged in the following transaction "Issued a $30,000 note payable to borrow cash from the bank." On the statement of Cash Flows, the transaction would be classified as a. Cash Flows from Operating Activities. b. Cash Flows from Investing Activities. c. Cash Flows from Financing Activities. d. Noncash transaction.

An increase in Stockholders' Equity from revenues will also result in an increase in a. liabilities b. assets c. expenses d. cash flow from financing activities

For EFG Co., the transaction "Payment to creditors" would a. increase total assets b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Cash sales to customers" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Payment of interest expense" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Purchase of store equipment with cash" a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Payment of dividends" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Purchase of store equipment with a note payable" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Payment of quarterly taxes" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Receipt of interest income" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Receipt of a utility bill" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

For EFG Co., the transaction "Billed a customer for fees earned" would a. increase total assets. b. decrease total assets c. have no effect on total assets d. decrease stockholders' equity

The income statement for August indicates net income of $50,000. The corporation also paid $10,000 in dividends during the same period. If there was no beginning balance in stockholders' equity, what is the ending balance in stockholders' equity? a. $40,000 b. $50,000 c. $10,000 d. $60,000

Anthony, Inc. buys land for $50,000 cash. The net affect on assets is a. cash only b. capital stock only c. cash and retained earnings d. cash and capital stock

Declaring and paying cash dividends affects which accounts? a. cash only b. capital stock only c. cash and retained earnings d. cash and capital stock

Buying equipment for cash affects which accounts? a. cash only b. capital stock only c. cash and retained earnings d. cash and capital stock

Receiving cash for fees earned affects which financial statement elements? a. assets only b. stockholders' equity only c. assets and stockholders' equity d. assets and liabilities

Paying expenses affects which financial statement elements? a. assets only b. stockholders' equity only c. assets and stockholders' equity d. assets and liabilities

The payment of a liability a. decreases assets and stockholders' equity b. increases assets and decreases liabilities c. decreases assets and increases liabilities d. decreases assets and decreases liabilities

The first month of operation showed the net cash from operating activities to be $3,760, the net cash from investing activities to be ($5,415), and the ending cash balance to be $3,425. The net cash from financing activities must be a. $1,770 b. $5,080 c. $5,750 d. $12,600

What are the basic elements of a financial accounting system?