Chapter 6 (Corrected Again)

106) Which of the following journal entries is correct when a business entity purchases a building by paying cash and by signing a note payable for the balance? A) Account Title Debit Credit Building xxx Cash xxx Notes Payable xxx B) Account Title Debit Credit Building xxx Cash xxx C) Account Title Debit Credit Cash xxx Notes Payable xxx Building xxx D) Account Title Debit Credit Building xxx Cash xxx Notes Payable xxx

A

108) Which of the following journal entries is correct when a business entity uses cash to pay an account payable? A) Account Title Debit Credit Accounts Payable xxx Cash xxx B) Account Title Debit Credit Accounts Receivable xxx Cash xxx C) Account Title Debit Credit Cash xxx Accounts Payable xxx D) Account Title Debit Credit Cash xxx Notes Payable xxx

A

115) The Pioneer Company has provided the following account balances: Cash $39,100; Short-term investments $5,100; Accounts receivable $7,100; Supplies $53,500; Long-term notes receivable $3,100; Equipment $101,500; Factory Building $191,000; Intangible assets $7,100; Accounts payable $28,900; Accrued liabilities payable $3,450; Short-term notes payable $16,200; Long-term notes payable $97,500; Common stock $191,000; Retained earnings $70,450. What are Pioneer's total current liabilities? A) $4

A

118) 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)

A

119) At the beginning of April, Warren Corporation's assets totaled $255,000 and liabilities totaled $75,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $27,500 cash. A building costing $110,000 was purchased using $17,500 cash and by signing an $92,500 long-term note payable. Short-term investments costing $10,500 were purchased using cash. $11,500 was paid to an employee as a loan; the employee signed a six-month note in exchange f

A

122) At the beginning of April, Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash. A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable. Short-term investments costing $9,000 were purchased using cash. $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for

A

123) Tiger Company's total stockholders' equity at the beginning of the year was $189,000. During the year Tiger reported the following: Net income of $93,000. Dividend declarations totaling $18,400. Issued stock to stockholders in exchange for $49,000 cash. Borrowed $12,400 from a stockholder. What is Tiger's total stockholders' equity at the end of the year? A) $312,600 B) $331,000 C) $325,000 D) $306,600

A

127) Which of the following transactions would create an increase in cash from a financing activity? A) Issuing shares of common stock to stockholders in exchange for cash B) Selling a short-term stock investment in exchange for cash C) Selling used equipment, which was a part of property and equipment, for cash D) The payment of an account payable

A

128) Which of the following best describes financing activities? A) They primarily deal with securing money by bank loans or selling stock to investors. B) They primarily are connected to the income-producing activities of the company as reported on the income statement. C) They primarily deal with buying buildings to be used over many years by the business. D) They primarily deal with selling facilities once used by the business.

A

129) Which of the following would cause a decrease in cash from investing activities? A) Purchasing shares of stock of another company B) Paying a cash dividend to stockholders C) Issuing additional shares of the company's common stock D) Using cash to purchase supplies

A

132) Which of the following would result when a company purchases a factory building using cash? A) A noncurrent asset and an investing cash flow are created. B) A noncurrent asset and a financing cash flow are created. C) A current asset and an investing cash flow are created. D) A current asset and a financing cash flow are created.

A

134) Which of the following would result when a company pays a previously declared cash dividend? A) Current liabilities are reduced and a financing cash flow is created. B) Stockholders' equity is reduced and a financing cash flow is created. C) Current assets are reduced and an investing cash flow is created. D) Stockholders' equity is reduced and an investing cash flow is created.

A

148) Melrose Corporation has provided the following account balances: Cash $ 95,100 Short-term investments $ 10,100 Accounts receivable $ 120,100 Supplies $ 15,100 Long-term notes receivable $ 5,100 Equipment $ 240,100 Factory Building $ 450,100 Intangible assets $ 15,100 Accounts payable $ 75,200 Accrued liabilities payable $ 10,200 Short-term notes payable $ 35,100 Long-term notes payable $ 230,400 Common stock $ 450,500 Retained earnings $ 149,400 What is Melrose's current ratio? A) 2.00 B)

A

149) Melrose Corporation has provided the following account balances: Cash $ 95,000 Short-term investments $ 10,000 Accounts receivable $ 120,000 Supplies $ 15,000 Long-term notes receivable $ 5,000 Equipment $ 240,000 Factory Building $ 450,000 Intangible assets $ 15,000 Accounts payable $ 75,000 Accrued liabilities payable $ 10,000 Short-term notes payable $ 35,000 Long-term notes payable $ 230,000 Common stock $ 450,000 Retained earnings $ 150,000 What is Melrose's current ratio? A) 2.00 B)

A

150) At the beginning of October, Ingram Company's assets totaled $289,600 and liabilities totaled $73,600. During October the following summarized transactions occurred: Additional shares of stock were sold for $25,600 cash. A building costing $117,200 was purchased using $13,600 cash and by signing $103,600 long-term note payable. Short-term investments costing $12,400 were purchased using cash. $13,600 was paid to an employee as a loan; the employee signed a six-month note in exchange f

A

153) At the beginning of October, Ingram Company's assets totaled $288,000 and liabilities totaled $72,000. During October the following summarized transactions occurred: Additional shares of stock were sold for $24,000 cash. A building costing $114,000 was purchased using $12,000 cash and by signing a $102,000 long-term note payable. Short-term investments costing $10,800 were purchased using cash. $12,000 was paid to an employee as a loan; the employee signed a six-month note in exchange

A

39) Assets, liabilities, and stockholders' equity are all found within which of the following financial statements? A) Balance sheet B) Income statement C) The investing activities section of the Statement of Cash Flows D) Statement of stockholders' equity

A

49) 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

A

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

A

65) Which of the following direct effects on the accounting equation isnot possible as a result of a single business transaction which impacts only two accounts? A) An increase in a liability and a decrease in an asset B) An increase in stockholders' equity and an increase in an asset C) An increase in an asset and a decrease in an asset D) A decrease in stockholders' equity and a decrease in an asset

A

70) A company's January 1, 2022 balance sheet reported total assets of $133,000 and total liabilities of $47,000. During January 2022, the following transactions occurred: (A) the company issued stock and collected cash totaling $43,000; (B) the company paid an account payable of $7,300; (C) the company purchased supplies for $3,300 with cash; (D) the company purchased land for $63,000, paying $23,000 with cash and signing a note payable for the balance. What is total stockholders' equity

A

73) Which of the following describes the impact on the balance sheet of paying a current liability using cash? A) Current assets will decrease. B) Current liabilities will increase. C) Stockholders' equity will decrease. D) Total assets will remain the same.

A

74) 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

78) Which of the following isnot considered to be a recordable transaction? A) Signing a contract to have an outside cleaning service clean offices nightly B) Paying employees their wages C) Selling stock to investors D) Buying equipment and agreeing to pay a note payable and interest at the end of a year

A

88) Borrowing cash from a bank would result in which of the following? A) A debit to cash and a credit to notes payable B) A debit to notes payable and a credit to cash C) A debit to both cash and notes payable D) A debit to cash and a credit to additional paid-in capital

A

91) Trane Company purchases a delivery van by paying $13,500 cash and by signing a $33,500 note payable. Which of the following correctly describes the recording of the delivery van purchase? A) The delivery van account is debited for $47,000. B) The delivery van account is debited for $33,500. C) Cash is debited for $13,500. D) Notes payable is debited for $33,500.

A

93) Cadet Company paid an accounts payable of $2,700. This transaction should be recorded on the payment date as follows: A) Account Title Debit Credit Accounts payable 2,700 Cash 2,700 B) Account Title Debit Credit Cash 2,700 Accounts payable 2,700 C) Account Title Debit Credit Cash 2,700 Cost of goods sold 2,700 D) Account Title Debit Credit Notes payable 2,700 Cash 2,700

A

94) Cadet Company paid an accounts payable of $1,000. This transaction should be recorded on the payment date as follows: A) Account Title Debit Credit Accounts payable 1,000 Cash 1,000 B) Account Title Debit Credit Cash 1,000 Accounts payable 1,000 C) Account Title Debit Credit Notes Payable 1,000 Cash 1,000 D) Account Title Debit Credit Cash 1,000 Cost of goods sold 1,000

A

95) Centex, Incorporated issued 56,000 shares of its $1 par value common stock for $30 per share. The journal entry to record the stock issue would include which of the following? A) A credit to common stock for $56,000 B) A credit to cash for $1,680,000 C) A credit to additional paid-in capital for $56,000 D) A credit to additional paid-in capital for $1,680,000

A

99) Eagle Crest Company has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $60,000 and the yearend balance was $75,000. The additional paid-in capital account balance increased $7,500 during the year. The retained earnings balance at the beginning of the year was $225,000 and the year-end balance was $273,000. Net income was $78,000. How much were Eagle Crest's dividend declarations during its recent year

A

103) Which of the following journal entries is correct when a business entity purchases land costing $48,000 by signing a one-year note payable? A) Account Title Debit Credit Cash 48,000 Notes payable 48,000 B) Account Title Debit Credit Land 48,000 Notes payable 48,000 C) Account Title Debit Credit Land 48,000 Accounts payable 48,000 D) Account Title Debit Credit Notes payable 48,000 Land 48,000

B

105) Which of the following journal entries is correct when a business entity issues common stock, above par value, to stockholders in exchange for cash? A) Account Title Debit Credit Cash xxx Common Stock xxx Retained earnings xxx B) Account Title Debit Credit Cash xxx Common Stock xxx Additional paid-in capital xxx C) Account Title Debit Credit Cash xxx Investments xxx D) Account Title Debit Credit Common stock xxx Cash xxx

B

109) 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

114) 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

121) At the beginning of April, Warren Corporation's assets totaled $255,000 and liabilities totaled $75,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $27,500 cash. A building costing $110,000 was purchased using $17,500 cash and by signing an $92,500 long-term note payable. Short-term investments costing $10,500 were purchased using cash. $11,500 was paid to an employee as a loan; the employee signed a six-month note in exchange f

B

124) Tiger Company's total stockholders' equity at the beginning of the year was $175,000. During the year Tiger reported the following: Net income of $79,000. Dividend declarations totaling $17,000. Issued stock to stockholders in exchange for $42,000 cash. Borrowed $20,000 from a stockholder.v What is Tiger's total stockholders' equity at the end of the year? A) $296,000 B) $279,000 C) $290,000 D) $273,000

B

130) Which of the following would result when a company borrows cash and signs a note payable that is due in two years? A) A noncurrent liability and an investing cash flow are created. B) A noncurrent liability and a financing cash flow are created. C) A current liability and an investing cash flow are created. D) A current liability and a financing cash flow are created.

B

131) Which of the following would result when a company sells additional shares of common stock for cash? A) A noncurrent liability and a financing cash flow are created. B) Common stock increases and a financing cash flow results. C) A noncurrent liability and an investing cash flow are created. D) Common stock increases and an investing cash flow results.

B

138) Regina Company's January 1, 2022 balance sheet reported total assets of $115,800 and total liabilities of $50,000. During January 2022, the following transactions occurred: (A) the company issued stock and collected cash totaling $42,000; (B) the company paid an account payable of $6,600; (C) the company purchased supplies for $980 with cash; (D) the company purchased land for $66,000, paying $8,700 with cash and signing a note payable for the balance. What is total stockholders' equi

B

139) Regina Company's January 1, 2022 balance sheet reported total assets of $96,000 and total liabilities of $32,000. During January 2022, the following transactions occurred: (A) the company issued stock and collected cash totaling $24,000; (B) the company paid an account payable of $4,800; (C) the company purchased supplies for $800 with cash; (D) the company purchased land for $48,000, paying $8,000 with cash and signing a note payable for the balance. What is total stockholders' equit

B

142) Ironwood Company purchased equipment for $213,600 and paid for one third in cash; the other two thirds is financed by a note payable. Which of the following are the effects on Ironwood's accounting equation? A) Total liabilities increase $213,600. B) Total assets increase $142,400. C) Total liabilities decrease $71,200. D) Total assets increase $213,600.

B

145) Melrose Corporation has provided the following account balances: Cash $ 95,000 Short-term investments $ 10,000 Accounts receivable $ 120,000 Supplies $ 15,000 Long-term notes receivable $ 5,000 Equipment $ 240,000 Factory Building $ 450,000 Intangible assets $ 15,000 Accounts payable $ 75,000 Accrued liabilities payable $ 10,000 Short-term notes payable $ 35,000 Long-term notes payable $ 230,000 Common stock $ 450,000 Retained earnings $ 150,000 What are Melrose's total current assets? A)

B

146) Melrose Corporation has provided the following account balances: Cash $ 96,100 Short-term investments $ 11,100 Accounts receivable $ 121,100 Supplies $ 16,100 Long-term notes receivable $ 6,100 Equipment $ 241,100 Factory Building $ 451,100 Intangible assets $ 16,100 Accounts payable $ 77,200 Accrued liabilities payable $ 12,200 Short-term notes payable $ 36,100 Long-term notes payable $ 234,400 Common stock $ 455,500 Retained earnings $ 143,400 What are Melrose's total current liabilities

B

152) At the beginning of October, Ingram Company's assets totaled $289,500 and liabilities totaled $73,500. During October the following summarized transactions occurred: Additional shares of stock were sold for $25,500 cash. A building costing $117,000 was purchased using $13,500 cash and by signing a $103,500 long-term note payable. Short-term investments costing $12,300 were purchased using cash. $13,500 was paid to an employee as a loan; the employee signed a six-month note in exchange

B

42) Which of the following best describes assets? A) Resources that represent the residual value of the company B) Resources that have measurable value and are expected to benefit the company C) Resources that are expected to be settled in the future by providing services D) Resources that are reported on each of the four financial statements and are considered elements of the income statement

B

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

B

55) Which of the following are used to indicate amounts investors pay to a company to purchase its stock? A) Common Stock and Treasury Stock B) Common Stock and Additional Paid-in Capital C) Earned Capital and Additional Paid-in Capital D) Retained Earnings and Treasury Stock

B

57) Which of the following statements istrue? A) Contributed capital is a noncurrent asset. B) Current liabilities are obligations 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 land held for investment are classified as intangible assets on the balance sheet.

B

60) Which of the following liability accounts doesnot usually require a future cash payment? A) Accounts payable B) Unearned revenues C) Taxes payable D) Notes payable

B

64) A corporation purchased factory equipment using cash. Which of the following statements regarding this purchase is correct? A) The cost of the factory equipment is an expense at the time of purchase. B) The total assets will not change. C) The total liabilities will increase. D) The current stockholders' equity will decrease.

B

67) A company's January 1, 2022 balance sheet reported total assets of $167,000 and total liabilities of $68,500. During January 2022, the company completed the following transactions: (A) paid a note payable using $18,500 cash (no interest was paid); (B) collected a $17,500 accounts receivable; (C) paid a $6,700 accounts payable; and (D) purchased a truck for $6,700 cash and by signing a $28,500 note payable from a bank. The company's January 31, 2022 balance sheet would report which of t

B

68) A company's January 1, 2022 balance sheet reported total assets of $150,000 and total liabilities of $60,000. During January 2022, the company completed the following transactions: (A) paid a note payable using $10,000 cash (no interest was paid); (B) collected a $9,000 accounts receivable; (C) paid a $5,000 accounts payable; and (D) purchased a truck for $5,000 cash and by signing a $20,000 note payable from a bank. The company's January 31, 2022 balance sheet would report which of th

B

71) A company's January 1, 2022 balance sheet reported total assets of $120,000 and total liabilities of $40,000. During January 2022, 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

B

79) Which of the following transactions will cause both the left and right side of the accounting equation to decrease? A) Collecting cash from a customer who owed us money B) Paying a supplier for inventory we previously purchased on account C) Borrowing money from a bank D) Purchasing equipment using cash

B

86) Which of the following statements isincorrect? A) Stockholders' equity accounts normally have credit balances. B) Liability accounts are decreased by credits. C) Stockholders' equity accounts are increased by credits. D) Asset accounts are increased by debits.

B

101) Eagle Crest Company has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $60,000 and the yearend balance was $75,000. The additional paid-in capital account balance increased $7,500 during the year. The retained earnings balance at the beginning of the year was $225,000 and the year-end balance was $273,000. Net income was $78,000. How much did Eagle Crest sell its common stock for during the year? A)

C

104) 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) Account Title Debit Credit Cash 30,000 Notes Payable 30,000 B) Account Title Debit Credit Land 30,000 Accounts payable 30,000 C) Account Title Debit Credit Land 30,000 Notes Payable 30,000 D) Account Title Debit Credit Notes Payable 30,000 Land 30,000

C

111) Which of the following account balances wouldnot be included in the calculation of the current ratio? A) Accounts receivable B) Short-term investments C) Equipment D) Supplies

C

116) 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

C

120) At the beginning of April, Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000. During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash. A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable. Short-term investments costing $9,000 were purchased using cash. $10,000 was paid to an employee as a loan; the employee signed a six-month note in exchange for

C

126) Surprise Company's total stockholders' equity at the beginning of the year was $320,000. During the year Surprise reported the following: Net loss of $48,000. Stock issued in exchange for land totaling $128,000. Collections of accounts receivable $64,000. Dividends declared and paid totaling $3,200. What is Surprise's total stockholders' equity at the end of the year? A) $556,800 B) $460,800 C) $396,800 D) $268,800

C

135) Which of the following would be classified as financing cash flows on a statement of cash flows? 1. Paying cash dividends. 2. Lending cash to others. 3. Issuing stock for cash. 4. Purchasing long-term assets for cash. A) 1, 2, 3 B) 2, 3, 4 C) 1, 3 D) 2, 4

C

137) Which of the following statements isfalse? A) Investing cash flows include the cash flows associated with lending money to others. B) Financing cash flows include the cash flows associated with issuing stock and paying dividends. C) Financing cash flows include the cash flows associated with borrowing and repaying debt excluding short-term bank loans. D) Investing cash flows include the cash flows associated with buying and selling noncurrent assets.

C

144) Melrose Corporation has provided the following account balances: Cash $ 95,500 Short-term investments $ 10,500 Accounts receivable $ 120,500 Supplies $ 15,500 Long-term notes receivable $ 5,500 Equipment $ 240,500 Factory Building $ 450,500 Intangible assets $ 15,500 Accounts payable $ 76,000 Accrued liabilities payable $ 11,000 Short-term notes payable $ 35,500 Long-term notes payable $ 232,000 Common stock $ 452,500 Retained earnings $ 147,000 What are Melrose's total current assets? A)

C

147) Melrose Corporation has provided the following account balances: Cash $ 95,000 Short-term investments $ 10,000 Accounts receivable $ 120,000 Supplies $ 15,000 Long-term notes receivable $ 5,000 Equipment $ 240,000 Factory Building $ 450,000 Intangible assets $ 15,000 Accounts payable $ 75,000 Accrued liabilities payable $ 10,000 Short-term notes payable $ 35,000 Long-term notes payable $ 230,000 Common stock $ 450,000 Retained earnings $ 150,000 What are Melrose's total current liabilities

C

151) At the beginning of October, Ingram Company's assets totaled $288,000 and liabilities totaled $72,000. During October the following summarized transactions occurred: Additional shares of stock were sold for $24,000 cash. A building costing $114,000 was purchased using $12,000 cash and by signing a $102,000 long-term note payable. Short-term investments costing $10,800 were purchased using cash. $12,000 was paid to an employee as a loan; the employee signed a six-month note in exchange

C

38) Which of the following statements about stockholders' equity isfalse? 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

40) Accounts payable would be reported within which of the following financial statements? A) Statement of cash flows B) Income statement C) Balance sheet D) Statement of stockholders' equity

C

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

C

44) Which of the following results from a company paying its investors to repurchase a portion of its previously issued common stock? A) Contributed capital B) Owners' stock C) Treasury stock D) Unearned capital

C

46) Which of the following statements isincorrect concerning balance sheets prepared under IFRS and GAAP? A) The same elements are used in preparing balance sheets under both GAAP and IFRS. B) Under IFRS stockholders' equity is listed before liabilities, while under GAAP liabilities are listed before stockholders' equity. C) Under GAAP assets are usually listed in increasing order of liquidity, while under IFRS assets are usually listed in decreasing order of liquidity. D) Under GAAP cur

C

48) In what order are current assets listed on a balance sheet? A) By dollar amount (largest first) B) By date of acquisition (earliest first) C) By liquidity D) By relevance to the operation of the business

C

54) How are liabilities listed on the balance sheet? A) In order of magnitude (largest to smallest) B) In order of liquidity C) In order of maturity D) Alphabetically within current liabilities and by magnitude with noncurrent liabilities

C

56) Which of the following wouldnot be considered a current asset? A) Inventory B) Prepaid expenses C) Land used in daily operations D) Accounts receivable

C

59) Which of the following wouldnot 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

66) Which of the following direct effects on the accounting equation isnot possible as a result of a single business transaction which impacts only two accounts? 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

87) Selling stock to investors for cash would result in which of the following? A) A debit to additional paid-in capital and a credit to cash B) A credit to both cash and additional paid-in capital C) A debit to cash and a credit to common stock D) A debit to cash and a credit to the investment account

C

92) Trane company purchases a delivery van by paying $7,500 cash and by signing a $37,500 note payable. Which of the following correctly describes the recording of the delivery van purchase? A) The delivery van account is debited for $37,500. B) Notes payable is debited for $37,500. C) The delivery van account is debited for $45,000. D) Cash is debited for $7,500.

C

98) Eagle Crest Company has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $12,000 and the yearend balance was $16,000. The additional paid-in capital account balance increased $3,700 during the year. The retained earnings balance at the beginning of the year was $70,000 and the year-end balance was $91,000. Net income was $38,000. How much were Eagle Crest's dividend declarations during its recent year of

C

100) Eagle Crest Company has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $16,000 and the yearend balance was $18,000. The additional paid-in capital account balance increased $3,200 during the year. The retained earnings balance at the beginning of the year was $95,000 and the year-end balance was $86,000. Net income was $33,000. How much did Eagle Crest sell its common stock for during the year? A) $1

D

102) 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

107) Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A) Account Title Debit Credit Cash xxx Advertising expense xxx B) Account Title Debit Credit Advertising expense xxx Cash xxx C) Account Title Debit Credit Cash xxx Prepaid advertising expense xxx D) Account Title Debit Credit Prepaid advertising expense xxx Cash xxx

D

110) Which of the following transactions would result in a decrease 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 delivery vehicle by signing a long-term note payable D) Purchasing land by paying cash

D

112) Which of the following statements doesnot properly describe the current ratio? A) It measures the ability of a firm to pay its debts in the short run. B) It is current assets divided by current liabilities. C) It is a measure of a firm's short-run liquidity. D) It measures a firm's ability to pay its long-term debts as they mature.

D

113) The Pioneer Company has provided the following account balances: Cash $38,700; Short-term investments $4,700; Accounts receivable $51,500; Supplies $6,700; Long-term notes receivable $2,700; Equipment $99,500; Factory Building $187,000; Intangible assets $6,700; Accounts payable $29,300; Accrued liabilities payable $3,650; Short-term notes payable $15,400; Long-term notes payable $95,500; Common stock $187,000; Retained earnings $66,650. What are Pioneer's total current assets? A) $43,400

D

117) The Pioneer Company has provided the following account balances: Cash $38,300; Short-term investments $4,300; Accounts receivable $6,300; Supplies $49,500; Long-term notes receivable $2,300; Equipment $97,500; Factory Building $183,000; Intangible assets $6,300; Accounts payable $29,700; Accrued liabilities payable $3,850; Short-term notes payable $14,600; Long-term notes payable $93,500; Common stock $183,000; Retained earnings $62,850. What is Pioneer's current ratio? A) 1.02 B) 2.22 C)

D

125) Surprise Company's total stockholders' equity at the beginning of the year was $250,000. During the year Surprise reported the following: Net loss of $37,500. Stock issued in exchange for land totaling $100,000. Collections of accounts receivable $50,000. Dividends declared and paid totaling $2,500. What is Surprise's total stockholders' equity at the end of the year? A) $360,000 B) $210,000 C) $435,000 D) $310,000

D

133) Which of the following would result when a company lends cash to a customer in exchange for a ten-month note receivable? A) A noncurrent asset and an investing cash flow are created. B) A noncurrent asset and a financing cash flow are created. C) A current asset and a financing cash flow are created. D) A current asset and an investing cash flow are created.

D

136) Which of the following would be classified as investing cash flows on a statement of cash flows? 1. Acquiring a building by signing a long-term mortgage payable. 2. Lending cash to others. 3. Issuing stock for cash. 4. Purchasing long-term assets for cash. 5. Selling stock investments for cash. A) 1, 4, 5 B) 1, 2, 4 C) 1, 3, 5 D) 2, 4, 5

D

140) Dakota Industries has $100,200 in total assets, $44,600 in total liabilities, and a $15,800 credit balance in retained earnings. What is the balance in the contributed capital accounts? A) $71,400 B) $60,400 C) $55,600 D) $39,800

D

141) Dakota Industries has $96,000 in total assets, $43,200 in total liabilities, and a $14,400 credit balance in retained earnings. What is the balance in the contributed capital accounts? A) $67,200 B) $52,800 C) $57,600 D) $38,400

D

143) Ironwood Company purchased equipment for $210,000 and paid for one third in cash; the other two thirds is financed by a note payable. Which of the following are the effects on Ironwood's accounting equation? A) Total assets increase $210,000. B) Total liabilities increase $210,000. C) Total liabilities decrease $70,000. D) Total assets increase $140,000.

D

43) Which of the following assumptions implies that the assets and liabilities of the business are accounted for separately from the assets and liabilities of the owners? A) Monetary unit assumption B) Continuity assumption C) Historical cost principle D) Separate entity assumption

D

45) __________ represents a measurable obligation resulting from a past transaction which is expected to be settled in the future by transferring assets or providing services. A) A credit account B) Unearned capital C) Treasury stock D) A liability

D

47) Chad Jones is the sole owner and manager of Jones Glass Repair Shop. Jones purchased a truck, to be used in the business, for its market value of $35,000. Which of the following fundamentals requires Jones to record the truck at the price paid to buy it? A) Separate-entity assumption B) Revenue principle C) Monetary unit assumption D) Historical cost principle

D

50) Where would changes in stockholders' equity resulting from financing provided by operations be reported? A) Within a long-term asset account B) Within the additional paid-in capital account C) Within a liability account D) Within the retained earnings account

D

52) 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

53) Which of the following statements isfalse? A) Absent evidence to the contrary, a company is expected to continue operating for the foreseeable future. B) Earned capital is the portion of profits reinvested in the business. C) On the balance sheet, Common stock represents the total par value of stock issued by the company to investors. D) Accounting information should be reported in the national monetary unit with adjustment for inflation.

D

58) Which of the following doesnot correctly describe business transactions or events? A) They include exchanges of assets or services by one business for assets, services, or promises to pay from another business. B) They include the using up of insurance paid for in advance. C) They have an economic impact on a business entity. D) They do not include measurable internal events such as the use of assets in operations.

D

61) Which of the following transactions wouldnot be considered an external exchange? A) The purchase of supplies on credit B) Cash received from the issuance of common stock C) Cash paid to a bank for interest on a loan D) Using up insurance, which had been paid for in advance

D

63) 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

69) Which of the following is a result of equipment purchased with cash? A) Total assets decrease B) Current assets do not change C) Current assets increase D) Stockholders' equity does not change

D

72) Which of the following describes the impact on the balance sheet of purchasing supplies for cash? A) Current assets will decrease. B) Current assets will increase. C) Stockholders' equity will decrease. D) Total assets remain the same.

D

75) Blankenship Company has $87,000 in total assets, $32,500 in total liabilities, and a $16,200 credit balance in retained earnings. What is the balance in the contributed capital accounts? A) $70,700 B) $54,500 C) $48,700 D) $38,300

D

76) Blankenship Company has $160,000 in total assets, $72,000 in total liabilities, and a $24,000 credit balance in retained earnings. What is the balance in the contributed capital accounts? A) $112,000 B) $88,000 C) $96,000 D) $64,000

D

77) The dual effects concept states that: A) both the income statement and balance sheet are impacted by every transaction. B) every transaction has an impact on assets and stockholders' equity. C) there are only two accounts involved in every transaction. D) every transaction has at least two effects on the accounting equation.

D

80) When a company buys equipment for $165,000 and pays for two thirds in cash and the other one third is financed by a note payable, which of the following are the effects on the accounting equation? A) Total liabilities decrease $110,000. B) Total assets increase $165,000. C) Total liabilities increase $165,000. D) Total assets increase $55,000.

D

81) 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

82) Which of the following describes the impact on the balance sheet when a company uses cash to purchase the stock of another company? A) Total assets increase. B) Stockholders' equity increases. C) Stockholders' equity decreases. D) Total assets remain the same.

D

83) Which of the following transactions willnot 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

84) Alpha Company issued 4,700 shares of $10 par value common stock to stockholders, in exchange for $70,500 cash. Which of the following correctly describes the impact of this transaction on Alpha's financial statements? A) Stockholders have invested $117,500 as stockholders' equity. B) Common stock is reported at $70,500 in stockholders' equity. C) A $70,500 investment is reported as a long-term investment. D) Additional paid-in capital of $23,500 is reported in stockholders' equity.

D

85) Alpha Company issued 1,000 shares of $10 par value common stock to stockholders, in exchange for $15,000 cash. Which of the following correctly describes the impact of this transaction on Alpha's financial statements? A) A $15,000 investment is reported as a long-term investment. B) Stockholders have invested $25,000 as stockholders' equity. C) Common stock is reported at $15,000 in stockholders' equity. D) Additional paid-in capital of $5,000 is reported in stockholders' equity.

D

89) Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value? A) Account Title Debit Credit Cash xxx Retained earnings xxx B) Account Title Debit Credit Cash xxx Additional paid-in capital xxx C) Account Title Debit Credit Cash xxx Common Stock xxx D) Account Title Debit Credit Cash xxx Common Stock xxx Additional paid-in capital xxx

D

90) Which of the following statements isfalse? A) The common stock account has a credit balance. B) The additional paid-in capital account has a credit balance. C) Common stock may be issued for more than par value. D) The par value of common stock represents the stock's market value.

D

96) Centex, Incorporated issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following? A) A credit to cash for $1,000,000 B) A credit to additional paid-in capital for $1,000,000 C) A credit to additional paid-in capital for $50,000 D) A credit to common stock for $50,000

D

97) 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