ACCT Ch. 2 BANK

Which of the following statements is true? 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.

B. Current liabilities are debts expected to be paid within the next year

Which of the following best describes assets? A.Resources with possible future economic benefits owed by an entity as a result of past transactions. B. Resources with probable future economic benefits owned by an entity as a result of past transactions. C. Resources with probable future economic benefits owned by an entity as a result of future transactions. D. Resources with possible future economic benefits owed by an entity as a result of future transactions.

B. Resources with probable future economic benefits owned by an entity as a result of past transactions

Which of the following transactions would result in an increase in the current ratio? A. Collection of cash from an account receivable. B. Selling shares of stock to stockholders in exchange for cash. C. Purchasing a building with cash. D. Declaration of a cash dividend by the board of directors.

B. Selling shares of stock to stockholders in exchange for cash

Which of the following journal entries is correct when a business entity purchases land costing $30,000 by signing a one-year note payable? A. D: Cash Cr: Notes Payable B. D: Land Cr: Accounts payable C. D: Land Cr: Notes payable D. D: Notes Payable Cr: Land

C.

The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivable $48,000; Supplies $6,000; Long-term notes receivable $2,000; Equipment $96,000; Factory Building $180,000; Intangible assets $6,000; Accounts payable $30,000; Accrued liabilities payable $4,000; Short-term notes payable $14,000; Long-term notes payable $92,000; Common stock $180,000; Retained earnings $60,000. What are Pioneer's total current liabilities? A. $44,000. B. $34,000. C. $48,000. D. $140,000.

C. $48000 Current liabilities = $48,000 = $30,000 + $4,000 + $14,000

Which of the following describes the impact on the balance sheet when cash is received from the collection of an account receivable? A. Current assets will not change. B. Current assets will increase. C. Stockholders' equity will increase. D. Total assets will increase.

A. Current assets will not change

Cadet Company paid an account payable of $1,000. This transaction should be recorded on the payment date as follows: A. D: Accounts payable Cr: Cash B. D: Cash Cr: Accounts Payable C. D: Notes Payable Cr: Cash D. D: Cash Cr: Cost of Goods Sold

A.

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000. The additional paid-in capital account balance increased $2,500 during the year. The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000. Net income was $26,000. How much were Superior's dividend declarations during its recent year of operation? A. $10,000. B. $42,000. C. $26,000. D. The dividend declarations can not be determined given the above information.

A. $10000 Ending retained earnings ($91,000) = Beginning retained earnings ($75,000) + Net income ($26,000) - Dividends declared ($10,000).

The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivable $48,000; Supplies $6,000; Long-term notes receivable $2,000; Equipment $96,000; Factory Building $180,000; Intangible assets $6,000; Accounts payable $30,000; Accrued liabilities payable $4,000; Short-term notes payable $14,000; Long-term notes payable $92,000; Common stock $180,000; Retained earnings $60,000. What is Pioneer's current ratio? A. 2.00. B. 2.17. C. 2.71. D. 1.00.

A. 2.00 Current assets = $96,000 = $38,000 + $4,000 + $48,000 + $6,000. Current liabilities = $48,000 = $30,000 + $4,000 + $14,000. Current ratio = 2 = $96,000 ÷ $48,000.

In what order would the following assets be listed on a balance sheet? A. Cash, Short-term Investments, Accounts Receivable, Inventory. B. Cash, Intangible Assets, Accounts Receivable, Property and Equipment. C. Cash, Accounts Receivable, Property and Equipment, Inventory. D. Cash, Inventory, Intangible Assets, Accounts Receivable. Assets are listed in order of liquidity

A. Cash, Short-term Investments, Accounts Receivable, Inventory

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? A. $30,000. B. $110,000. C. $80,000. D. $194,000.

B. $110000

The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivable $48,000; Supplies $6,000; Long-term notes receivable $2,000; Equipment $96,000; Factory Building $180,000; Intangible assets $6,000; Accounts payable $30,000; Accrued liabilities payable $4,000; Short-term notes payable $14,000; Long-term notes payable $92,000; Common stock $180,000; Retained earnings $60,000. What are Pioneer's total current assets? A. $48,000. B. $96,000. C. $90,000. D. $42,000.

B. $96000 Current assets = $96,000 = $38,000 + $4,000 + $48,000 + $6,000

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000. The additional paid-in capital account balance increased $2,500 during the year. The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000. Net income was $26,000. How much did Superior sell its common stock for during the year? A. $5,000. B. $2,500. C. $7,500. D. $27,500.

C. $7500 The increase in the common stock account ($5,000) plus the increase in additional paid-in capital ($2,500) equals the selling price of the common stock ($7,500).

Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction? A. An increase in an asset and a decrease in another asset. B. An increase in an asset and an increase in stockholders' equity. C. A decrease in stockholders' equity and an increase in an asset. D. An increase in a liability and an increase in an asset.

C. A decrease in stockholders' equity and an increase in an asset A single transaction that results in a decrease in stockholders' equity and an increase in an asset is not possible because both items are recorded as debits and thus the accounting equation would not be in balance

Which of the following assumptions implies that a business can continue to remain in operation into the foreseeable future? A. Historical cost principle. B. Stable monetary unit assumption. C. Continuity assumption. D. Separate-entity assumption.

C. Continuity assumption

Which of the following would not be included under the account category of expenses within the chart of accounts? A. Cost of goods sold. B. Interest expense. C. Prepaid insurance expense. D. Income tax expense.

C. Prepaid insurance expense

Which of the following statements about stockholders' equity is false? A. Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. B. Stockholders' equity accounts are increased with credits. C. Stockholders' equity results only from contributions of the owners. D. The purchase of land for cash has no effect on stockholders' equity.

C. Stockholders' equity results only from contributions of the owners

Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value? A. D: Cash Cr: Retained earning B. D: Cash Cr: Additional paid-in-capital Cr: Common stock C. D: Cash Cr: Common stock D. D: Cash Cr: Common stock Cr: Additional paid-in capital

D.

A corporation has $80,000 in total assets, $36,000 in total liabilities, and a $12,000 credit balance in retained earnings. What is the balance in the contributed capital accounts? A. $56,000. B. $44,000. C. $48,000. D. $32,000.

D. $32000

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

D. A debit to retained earnings and a credit to dividends payable

Which of the following correctly describes retained earnings? A. It is the cumulative earnings of a company. B. It represents the investments by stockholders in a company. C. It equals total assets minus total liabilities. D. It is the cumulative earnings of a company less dividends declared.

D. It is the cumulative earnings of a company less dividends declared

Which of the following best describes liabilities? A. Possible debts or obligations of an entity as a result of future transactions, which will be paid with assets or services. B. Possible debts or obligations of an entity as a result of past transactions, which will be paid with assets or services. C. Probable debts or obligations of an entity as a result of future transactions, which will be paid with assets or services. D. Probable debts or obligations of an entity as a result of past transactions, which will be paid with assets or services.

D. Probable debts or obligations of an entity as a result of past transactions, which will be paid with assets or services

Which of the following statements is correct? A. Assets normally have a credit balance and are increased with debits. B. Assets normally have a debit balance and are increased with credits. C. Liability accounts normally have debit balances and are increased with debits. D. Stockholders' equity accounts normally have credit balances and are increased with credits.

D. Stockholders' equity accounts normally have credit balances and are increased with credits

Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock? A. Assets and retained earnings each increased $200,000. B. Assets and revenues each increased $200,000. C. Stockholders' equity and revenues each increased $200,000. D. Stockholders' equity and assets each increased $200,000.

D. Stockholders' equity and assets each increased $200,000

Which of the following transactions will not change a company's total stockholders' equity? A. Reporting of net income. B. Issuing stock to stockholders in exchange for cash. C. The declaration of a cash dividend. D. The purchase of a factory building.

D. The purchase of a factory building

When a company buys equipment for $150,000 and pays for one third in cash and the other two thirds is financed by a note payable, which of the following are the effects on the accounting equation? A. Total assets increase $150,000. B. Total liabilities increase $150,000. C. Total liabilities decrease $50,000. D. Total assets increase $100,000.

D. Total assets increase $100000