Deck 1: An Introduction to Accounting

Question 1

How does providing services for cash affect the accounting equation? Is it considered an asset source,asset use,or asset exchange transaction?

Answer 1

Providing services for cash increases assets and increases equity.It is considered an asset source transaction.

Question 2

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Pierce Co.paid $40,000 cash to purchase land.

Answer 2

(N)(N)(N)(N)(N)(N)(D)

Question 3

What is meant by the term double-entry bookkeeping?

Answer 3

All transactions affect the accounting equation in at least two places.

Question 4

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Walker Co.issued common stock for $150,000 cash.

Question 5

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Bell Co.provided consulting services for $20,000 cash.

Question 6

What is meant by the term "global GAAP"? How does it impact U.S.companies? What body is responsible for setting global standards?

Question 7

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Perez Co.paid $220,000 cash in salaries to its employees.

Question 8

Give three examples of asset use transactions.

Question 9

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Nguyen Co.borrowed $50,000 cash from Metropolitan Bank.

Question 10

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

Epstein Co.paid a $20,000 cash dividend to its owners.

Question 11

Name the group that has the primary authority for establishing U.S.GAAP.

Question 12

From what three sources does a business obtain its assets?

Question 13

How does the payment of cash dividends to stockholders affect the accounting equation? Is it considered an asset source,asset use,or asset exchange transaction?

Question 14

What is meant by the term "stakeholders?"

Question 15

Explain some of the accounting similarities and differences between not-for-profit organizations and for-profit businesses.

Question 16

Briefly distinguish between financial accounting and managerial accounting.

Question 17

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.

North Co.issued a note to purchase a building.

Question 18

Who are the three distinct types of participants in a market? Briefly describe the role of each group of participants.

Question 19

If the total equity claimed by owners of Vargas Construction is $150,000 and liabilities are $75,000,what are total assets?

Question 20

What financial statement elements are reported on a balance sheet?

Question 21

Define the term "accounting period." How does this term relate to the "matching concept" as it pertains to the income statement?

Question 22

The Heritage Company is a manufacturer of office furniture.Which term best describes Heritage's role in society?

A)Conversion agent
B)Regulatory agency
C)Consumer
D)Resource owner

Question 23

Which of the following is not an element of the financial statements?

A)Net income
B)Revenue
C)Assets
D)Cash

Question 24

Name and briefly describe each of the four financial statements.

Question 25

International accounting standards are formulated by the IASB.What does that acronym stand for?

A)Internationally Accepted Standards Board
B)International Accounting Standards Board
C)International Accountability Standards Bureau
D)International Accounting and Sustainability Board

Question 26

If a corporation issues common stock for $50,000 cash,in which section of the statement of cash flows will this transaction be reported?

Question 27

Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

A)Securities and Exchange Commission.
B)U.S.Congress.
C)International Accounting Standards Board.
D)Financial Accounting Standards Board.

Question 28

Hazeltine Company issued common stock for $200,000 cash.As a result of this event,

A)assets increased.
B)equity increased.
C)claims increased.
D)assets,claims,and equity all increased.

Question 29

Which resource providers lend financial resources to a business with the expectation of repayment with interest?

A)Consumers
B)Creditors
C)Investors
D)Owners

Question 30

The balance sheet of the Algonquin Company reported assets of $50,000,liabilities of $22,000 and common stock of $15,000.Based on this information only,the amount or balance for retained earnings must be

A)$7,000
B)$57,000
C)$13,000
D)$87,000

Question 31

Which types of accounts are closed out to retained earnings at the end of an accounting period?

Question 32

What does a company's statement of cash flows tell you about the company?

Question 33

If Ballard Company reported assets of $500 and liabilities of $200,Ballard's stockholders' equity totaled

A)$300.
B)$500.
C)$700.
D)Can not be determined.

Question 34

Stosch Company's balance sheet reported assets of $40,000,liabilities of $15,000 and common stock of $12,000 as of December 31,2015.If Retained Earnings on the December 31,2016 balance sheet is $18,000 and Stosch paid a $14,000 dividend during 2016,then the amount of net income for 2016 was which of the following?

A)$17,000
B)$19,000
C)$13,000
D)$21,000

Question 35

Which type of accounting information is intended to satisfy the needs of external users of accounting information?

A)Cost accounting
B)Managerial accounting
C)Tax accounting
D)Financial accounting

Question 36

Which of the following is false regarding managerial accounting information?

A)It is often used by investors.
B)It is more detailed than financial accounting information.
C)It can include nonfinancial information.
D)It focuses on divisional rather than overall profitability.

Question 37

Financial accounting standards are known collectively as GAAP.What does that acronym stand for?

A)Generally Accepted Accounting Principles
B)Generally Applied Accounting Procedures
C)Governmentally Approved Accounting Practices
D)Generally Authorized Auditing Principles

Question 38

If a company's total assets increased while liabilities and common stock were unchanged,then

A)revenues were greater than expenses.
B)retained earnings were less than net income during the period.
C)no dividends were paid during the period.
D)the company must have purchased assets with cash.

Question 39

Which of the following items is an example of revenue?

A)Cash received from a bank loan
B)Cash received from investors from the sale of common stock
C)Cash received from customers at the time services were provided
D)Cash received from the sale of land for its original selling price

Question 40

Li Company paid cash to purchase land.As a result of this accounting event

A)total assets decreased.
B)total assets were unaffected.
C)total equity decreased.
D)both assets and total equity decreased.

Question 41

Which of the following is not an asset use transaction?

A)Paying cash dividends
B)Paying cash expenses
C)Paying off the principal of a loan
D)Paying cash to purchase land

Question 42

As of December 31,2016,Bristol Company had $100,000 of assets,$40,000 of liabilities and $25,000 of retained earnings.What percentage of Bristol's assets were obtained through investors?

A)60%
B)25%
C)40%
D)35%

Question 43

Turner Company reported assets of $20,000 (including cash of $9,000),liabilities of $8,000,common stock of $7,000,and retained earnings of $5,000.Based on this information,what can be concluded?

A)25% of Turner's assets are the result of prior earnings.
B)$5,000 is the maximum dividend that can be paid to shareholders.
C)40% of Turner's assets are the result of borrowing from creditors.
D)25% of Turner's assets are from prior earnings,$5,000 is the maximum possible dividend, and 40% of assets are the result of borrowed resources.

Question 44

Which of the following does not describe the effects of an asset use transaction on a company's financial statements?

Question 45

In which section of a statement of cash flows would the payment of cash dividends be reported?

A)Investing activities.
B)Operating activities.
C)Financing activities.
D)Dividends are not reported on the statement of cash flows.

Question 46

At the time of liquidation,Fairchild Company reported assets of $200,000,liabilities of $120,000,common stock of $90,000 and retained earnings of ($10,000).What amount of Fairchild's assets are the shareholders entitled to receive?

A)$200,000
B)$80,000
C)$90,000
D)$100,000

Question 47

At the end of 2016,retained earnings for the Baker Company was $3,500.Revenue earned by the company in 2016 was $1,500,expenses paid during the period were $800,and dividends paid during the period were $500.Based on this information alone,retained earnings at the beginning of 2016 was

A)$3,300.
B)$3,700.
C)$2,800.
D)$3,800.

Question 48

Borrowing cash from the bank is an example of which type of transaction?

A)Asset source
B)Claims exchange
C)Asset use
D)Asset exchange

Question 49

Which of the following financial statements provides information about a company as of a specific point in time?

A)Income statement
B)Balance sheet
C)Statement of cash flows
D)Statement of changes in stockholders' equity

Question 50

Which financial statement matches asset increases from operating a business with asset decreases from operating the business?

A)Balance sheet.
B)Statement of changes in equity.
C)Income statement.
D)Statement of cash flows.

Question 51

On January 1,2015,Chavez Company had beginning balances as follows:
Assets = $12,500
Liabilities = $4,500
Common Stock = $3,000
During 2016,Chavez paid dividends to its stockholders of $2,000.Given that ending retained earnings was $6,000,what was Chavez's net income for the 2016 accounting period?

A)$3,000
B)$5,000
C)$7,000
D)$2,000

Question 52

Which of the following cash transactions results in no net change in assets?

A)Borrowing cash from a bank
B)Issuing common stock for cash
C)Purchasing land for cash
D)Providing services for cash

Question 53

Which of the following accounts are permanent?

A)Retained earnings.
B)All income statement accounts.
C)Dividends.
D)All balance sheet accounts including dividends.

Question 54

Which of the following could describe the effects of an asset exchange transaction on a company's financial statements?

Question 55

During 2016,Millstone Company earned $6,500 of cash revenue,paid cash dividends of $1,000 to owners and paid $4,000 for cash expenses.Liabilities were unchanged.Which of the following accurately describes the effect of these events on the elements of the company's financial statements?

A)Assets increased by $6,500.
B)Assets increased by $1,500.
C)Equity increased by $2,500.
D)Assets increased by $5,500.

Question 56

The transaction,"provided services for cash," affects which two accounts?

A)Revenue and Expense
B)Cash and Revenue
C)Cash and Expense
D)Cash and Dividends

Question 57

Use the following information to answer questions
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000;Liabilities = ?;Common Stock = $15,000;Revenue = $22,000;Dividends = $1,500;Beginning Retained Earnings = $3,500;Ending Retained Earnings = $7,500.

-Based on this information,the amount of expenses on Calloway's income statement was

A)$18,500.
B)$13,000.
C)$16,500.
D)$10,000.

Question 58

Which of the following items appears in the investing activities section of the statement of cash flows?

A)Cash inflow from interest revenue.
B)Cash inflow from the issuance of common stock.
C)Cash outflow for the payment of dividends.
D)Cash outflow for the purchase of land.

Question 59

Jackson Company had a net increase in cash from operating activities of $10,000 and a net decrease in cash from financing activities of $2,000.If the beginning and ending cash balances for the company were $4,000 and $11,000,then net cash change from investing activities was:

A)an outflow or decrease of $1,000.
B)an inflow or increase of $2,000.
C)an inflow or increase of $1,000.
D)zero.

Question 60

Use the following information to answer questions
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000;Liabilities = ?;Common Stock = $15,000;Revenue = $22,000;Dividends = $1,500;Beginning Retained Earnings = $3,500;Ending Retained Earnings = $7,500.

-The amount of liabilities reported on the end-of-period balance sheet was

A)$27,500.
B)$31,500.
C)$35,000.
D)$42,500.

Question 61

Robertson Company paid $1,850 cash for rent expense.As a result of this business event,

A)Total equity decreased.
B)Liabilities decreased.
C)The net cash flow from operating activities decreased.
D)Both total equity and net cash flow for operating activities decreased.

Question 62

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-Packard Company's net cash flow from financing activities for 2016 is

A)$220 outflow
B)$320 outflow
C)$5 inflow
D)$225 inflow

Question 63

Mayberry Company paid $30,000 cash to purchase land.As a result of this business event,

A)Total equity was not affected.
B)The net cash flow from investing activities decreased.
C)Total assets were not affected.
D)Total assets and total equity were not affected,and net cash flow from investing activities decreased.

Question 64

Use the following information to answer questions
Lexington Company engaged in the following transactions during 2015,its first year in operation: (Assume all transactions are cash transactions)
1.Acquired $6,000 cash from issuing common stock.
2.Borrowed $4,400 from a bank.
3.Earned $6,200 of revenues.
4.Incurred $4,800 in expenses.
5.Paid dividends of $800.
Lexington Company engaged in the following transactions during 2016:
1.Acquired an additional $1,000 cash from the issue of common stock.
2.Repaid $2,600 of its debt to the bank.
3.Earned revenues,$9,000.
4.Incurred expenses of $5,500.
5.Paid dividends of $1,280.

-The amount of total assets on Lexington's 2015 balance sheet was

A)$11,000.
B)$12,000.
C)$1,600.
D)$7,600.

Question 65

Use the following information to answer questions
Yowell Company began operations on January 1,2016.During 2016,the company engaged in the following cash transactions:
1)issued stock for $40,000
2)borrowed $25,000 from its bank
3)provided consulting services for $39,000
4)paid back $15,000 of the bank loan
5)paid rent expense for $9,000
6)purchased equipment costing $12,000
7)paid $3,000 dividends to stockholders
8)paid employees' salaries,$21,000

-What is Yowell's net cash flow from operating activities?

A)Inflow of $6,000
B)Inflow of $9,000
C)Inflow of $18,000
D)Inflow of $30,000

Question 66

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-The amount of assets on Packard's 2016 balance sheet is

A)$2,115.
B)$440.
C)$2,215.
D)$395.

Question 67

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-The amount of total equity on Packard's 2015 balance sheet is

A)$1,350.
B)$900.
C)$250.
D)$1,300.

Question 68

Use the following information to answer questions
Yowell Company began operations on January 1,2016.During 2016,the company engaged in the following cash transactions:
1)issued stock for $40,000
2)borrowed $25,000 from its bank
3)provided consulting services for $39,000
4)paid back $15,000 of the bank loan
5)paid rent expense for $9,000
6)purchased equipment costing $12,000
7)paid $3,000 dividends to stockholders
8)paid employees' salaries,$21,000

-What is Yowell's ending notes payable balance?

A)$0
B)$25,000
C)($15,000)
D)$10,000

Question 69

Santa Fe Company was started on January 1,2016,when it acquired $9,000 cash by issuing common stock.During 2016,the company earned cash revenues of $4,500,paid cash expenses of $3,750,and paid a cash dividend of $250.Based on this information,

A)The December 31,2016 balance sheet would show total equity of $8,750.
B)The 2016 income statement would show net income of $500.
C)The 2016 statement of cash flows would show net cash inflow from operating activities of $4,500.
D)The 2016 statement of cash flows would show a net cash flow from financing activities of $8,750.

Question 70

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-The amount of retained earnings on Packard's 2016 balance sheet is

A)$640.
B)$800.
C)$290.
D)$740.

Question 71

Glavine Company repaid a bank loan with cash.The cash flow from this event should be shown on the horizontal statements model as

A)an operating activity that decreases cash,decreases equity,and decreases net income.
B)a financing activity that decreases cash and decreases liabilities.
C)a financing activity that decreases cash,decreases equity,and decreases net income.
D)an investing activity that decreases cash and decreases liabilities.

Question 72

Which of the following items would appear in the cash flow from financing activities section of a statement of cash flows?

A)Paid cash for dividends.
B)Received cash for common stock.
C)Sold land for cash.
D)sectionPaying cash for dividends and receiving cash from common stock would both appear in the cash flow from financing activities section.

Question 73

Chow Company earned $1,500 of cash revenue,paid $1,200 for cash expenses,and paid a $200 cash dividend to its owners.Which of the following statements is true?

A)The net cash inflow from operating activities was $100.
B)The net cash outflow for investing activities was $200.
C)The net cash inflow from operating activities was $300.
D)The net cash outflow for investing activities was $100.

Question 74

Yi Company provided services to a customer for $5,500 cash.As a result of this event,

A)total assets increased and total equity decreased.
B)total assets were unchanged and cash flows from operating activities increased.
C)liabilities decreased and net income increased.
D)total assets increased and net income increased.

Question 75

Retained Earnings at the beginning and ending of the accounting period was $300 and $800,respectively.If revenues were $1,100 and dividends paid to stockholders were $200,expenses for the period must have been

A)$500.
B)$400.
C)$900.
D)$700.

Question 76

Use the following information to answer questions
Lexington Company engaged in the following transactions during 2015,its first year in operation: (Assume all transactions are cash transactions)
1.Acquired $6,000 cash from issuing common stock.
2.Borrowed $4,400 from a bank.
3.Earned $6,200 of revenues.
4.Incurred $4,800 in expenses.
5.Paid dividends of $800.
Lexington Company engaged in the following transactions during 2016:
1.Acquired an additional $1,000 cash from the issue of common stock.
2.Repaid $2,600 of its debt to the bank.
3.Earned revenues,$9,000.
4.Incurred expenses of $5,500.
5.Paid dividends of $1,280.

-The net cash flow from financing activities on Lexington's 2016 statement of cash flows was

A)$2,880 outflow
B)$2,880 inflow
C)$1,000 outflow
D)$1,000 inflow

Question 77

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-The total in Packard's retained earnings account before closing in 2015 is

A)$400.
B)$0.
C)$350.
D)$450.

Question 78

Use the following information to answer questions
Yowell Company began operations on January 1,2016.During 2016,the company engaged in the following cash transactions:
1)issued stock for $40,000
2)borrowed $25,000 from its bank
3)provided consulting services for $39,000
4)paid back $15,000 of the bank loan
5)paid rent expense for $9,000
6)purchased equipment costing $12,000
7)paid $3,000 dividends to stockholders
8)paid employees' salaries,$21,000

-What is Yowell's net income?

A)$9,000
B)$30,000
C)$18,000
D)$6,000

Question 79

Use the following information to answer questions
Packard Company engaged in the following transactions during 2015,its first year in operations: (Assume all transactions are cash transactions. )
1)Acquired $950 cash from the issue of common stock.
2)Borrowed $420 from a bank.
3)Earned $650 of revenues.
4)Paid expenses of $250.
5)Paid a $50 dividend.
During 2016,Packard engaged in the following transactions: (Assume all transactions are cash transactions. )
1)Issued an additional $325 of common stock.
2)Repaid $220 of its debt to the bank.
3)Earned revenues of $750.
4)Incurred expenses of $360.
5)Paid dividends of $100.

-The net cash inflow from operating activities on Packard's 2015 statement of cash flows is

A)$400.
B)$650.
C)$350.
D)$820.

Question 80

During 2016,Chico Company earned $1,950 of cash revenue,paid $1,600 of cash expenses,and paid a $150 cash dividend to its owners.Based on this information alone,which of the following is not correct?

A)Net income amounted to $350.
B)Total assets increased by $200.
C)Cash inflow from operating activities was $350.
D)Cash inflow from operating activities was $200.