Deck 1: An Introduction to Accounting

Question 1

On January 1, Year 2, Chavez Company had beginning balances as follows: During Year 2, 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 Year 2?

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

Answer 1

A
Explanation: On January 1, Year 2:
Assets = Liabilities + Common Stock + Retained Earnings
$12,500 = $4,500 + $3,000 + Retained Earnings
Retained Earnings = $5,000
During Year 2:
Beginning retained earnings + Net income − Dividends = Ending retained earnings
$5,000 + Net Income − $2,000 = $6,000
Net Income = $3,000

Question 2

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

Answer 2

C
Explanation: Assets = Liabilities + Equity; Equity includes common stock and retained earnings. $50,000 = $22,000 + $15,000 + Retained earnings; Retained earnings = $13,000

Question 3

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

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

Answer 3

B
Explanation: Businesses borrow money from creditors, and repay the amount borrowed, plus an additional fee known as interest. Investors, in contrast, provide financial resources in exchange for ownership interest in the business.

Question 4

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 5

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 6

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 7

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 8

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 9

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

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

Question 10

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 11

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 12

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

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

Question 13

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 14

As of December 31, Year 2, 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 15

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 16

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 17

Stosch Company's balance sheet reported assets of $40,000, liabilities of $15,000 and common stock of $12,000 as of December 31, Year 1. If Retained Earnings on the balance sheet as of December 31, Year 2, amount to $18,000 and Stosch paid a $14,000 dividend during Year 2, then the amount of net income for Year 2 was which of the following?

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

Question 18

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 19

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 20

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 21

During Year 2, 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.

Question 22

At the end of Year 2, retained earnings for the Baker Company was $3,500. Revenue earned by the company in Year 2 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 Year 2 was:

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

Question 23

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 24

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 25

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 26

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 27

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 28

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 29

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 30

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 31

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 32

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 33

During the year, 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 34

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 35

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 36

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

A) Option A
B) Option B
C) Option C
D) Option D

Question 37

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

A) Option A
B) Option B
C) Option C
D) Option D

Question 38

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 39

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 40

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 41

Santa Fe Company was started on January 1, Year 1, when it acquired $9,000 cash by issuing common stock. During Year 1, 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 balance sheet at December 31, Year 1 would show total equity of $8,750.
B) The Year 1 income statement would show net income of $500.
C) The Year 1 statement of cash flows would show net cash inflow from operating activities of $4,500.
D) The Year 1 statement of cash flows would show a net cash flow from financing activities of $8,750.

Question 42

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
The amount of total equity on Packard's balance sheet at the end of Year 1 is:"

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

Question 43

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
The amount of retained earnings on Packard's Year 2 balance sheet is:"

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

Question 44

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) paying cash for dividends and receiving cash from common stock would both appear in the cash flow from financing activities section.

Question 45

Dividends paid by a company are shown on the:

A) income statement.
B) statement of changes in stockholders' equity.
C) statement of cash flows.
D) the statement of changes in stockholders' equity and the statement of cash flows.

Question 46

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
What is Packard's retained earnings account balance at the end of Year 1 before the process of closing the accounts has been undertaken?"

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

Question 47

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 48

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (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 Year 2:
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 Year 2 statement of cash flows was

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

Question 49

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 50

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (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 Year 2:
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 balance sheet at the end of Year 1 was:

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

Question 51

Yowell Company began operations on January 1, Year 1. During Year 1, 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 cash
4) paid back $15,000 of the bank loan
5) paid rent expense for $9,000
6) purchased equipment for $12,000 cash
7) paid $3,000 dividends to stockholders
"8) paid employees' salaries of $21,000
What is Yowell's net income for Year 1?"

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

Question 52

Yowell Company began operations on January 1, Year 1. During Year 1, 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 cash
4) paid back $15,000 of the bank loan
5) paid rent expense for $9,000
6) purchased equipment for $12,000 cash
7) paid $3,000 dividends to stockholders
"8) paid employees' salaries of $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 53

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
Packard Company's net cash flow from financing activities for Year 2 is:"

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

Question 54

Yowell Company began operations on January 1, Year 1. During Year 1, 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 cash
4) paid back $15,000 of the bank loan
5) paid rent expense for $9,000
6) purchased equipment for $12,000 cash
7) paid $3,000 dividends to stockholders
"8) paid employees' salaries of $21,000
What is Yowell's notes payable balance at the end of Year 1?"

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

Question 55

Expenses are shown on the:

A) income statement.
B) balance sheet.
C) statement of changes in stockholders' equity.
D) the income statement and the statement of changes in stockholders' equity.

Question 56

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (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 Year 2:
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 retained earnings on Lexington's balance sheet at the end of Year 1 was:

A) $6,200.
B) $5,400.
C) $1,400.
D) $600.

Question 57

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (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 Year 2:
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.
Total liabilities on Lexington's balance sheet at the end of Year 1 equal:

A) $1,000.
B) $4,400.
C) ($2,600).
D) $480.

Question 58

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
Total assets on Packard's balance sheet at the end of Year 2 will equal:"

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

Question 59

Packard Company engaged in the following transactions during Year 1, its first year of 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 cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, 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 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
The net cash inflow from operating activities on Packard's statement of cash flows for Year 2 is:"

A) $390.
B) $650.
C) $350.
D) $820.

Question 60

As of December 31, Year 1, Mason Company had $500 cash. During Year 2, Mason earned $1,200 of cash revenue and paid $800 of cash expenses. The amount of cash shown on the balance sheet at the end of Year 2 would be:

A) $900.
B) $400.
C) $1,700.
D) $2,500.

Question 61

Zimmerman Company sold land for $25,000 cash. The original cost of the land was $25,000. Select the answer that indicates how this event affects the company's financial statements.

A) Option A
B) Option B
C) Option C
D) Option D

Question 62

Garrison Company acquired $23,000 by issuing common stock. Which of the following choices accurately reflects how this event affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 63

Delta Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Delta's statements?

A) Paid a cash dividend.
B) Incurred a cash expense.
C) Borrowed money from a bank.
D) Earned cash revenue.

Question 64

Reynolds Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Reynolds' statements?

A) Paid a cash dividend.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) The information provided does not represent a completed event.

Question 65

Perez Company paid a $300 cash dividend. Which of the following choices accurately reflects how this event affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 66

Frank Company earned $15,000 of cash revenue. Which of the following choices accurately reflects how this event affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 67

Indicate whether each of the following statements about retained earnings is true or false.
_______ a) A dividend paid to stockholders decreases retained earnings.
_______ b) Issuing common stock for cash increases retained earnings.
_______ c) The amount of net income for a period must equal retained earnings.
_______ d) The purchase of a truck decreases retained earnings.
_______ e) The amount of net income for a period increases retained earnings.

Question 68

Tandem Company borrowed $32,000 of cash from a local bank. Which of the following choices accurately reflects how this event affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 69

Jackson Company paid $500 cash for salary expenses. Which of the following choices accurately reflects how this event affects the company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 70

Indicate whether each of the following statements about accounting information is true or false.
_______ a) Financial accounting is primarily intended to satisfy the information needs of internal stakeholders.
_______ b) Managerial accounting information includes financial and nonfinancial information.
_______ c) The accounting information intended to satisfy the needs of a company's employees is managerial accounting information.
_______ d) GAAP requires that companies adhere to financial accounting standards.
_______ e) Managerial accounting information is usually less detailed than financial accounting information.

Question 71

Indicate whether each of the following statements about liabilities is true or false.
_______ a) A net loss on the income statement decreases liabilities.
_______ b) The acquisition of a bank loan increases both assets and liabilities.
_______ c) The accounting equation requires that liabilities be equal to equity.
_______ d) The amount of a company's liabilities is equal to (assets - equity).
_______ e) Liabilities are reported on the statement of cash flows of a business.

Question 72

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

A) Option A
B) Option B
C) Option C
D) Option D

Question 73

Northern Corporation invested $800 cash in South Company stock. Which of the following describes the effects of this transaction on Northern Corporation's books?

A) Option A
B) Option B
C) Option C
D) Option D

Question 74

Chico Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Chico's statements?

A) Issued common stock.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) Paid a cash dividend.

Question 75

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

A) Option A
B) Option B
C) Option C
D) Option D

Question 76

Liabilities are shown on the:

A) income statement.
B) balance sheet.
C) statement of cash flows.
D) statement of changes in stockholders' equity.

Question 77

Northern Corporation invested $800 cash in South Company stock. As a result of this transaction:

A) The balance in the Cash account on Northern's books would decrease, while the balance in the Cash account on South Company's books would increase.
B) South Company would have a cash inflow from investing activities.
C) Northern Corporation would have a cash outflow from financing activities.
D) All of these statements are true.

Question 78

Indicate whether each of the following statements about markets is true or false.
_______ a) Financial resources can be provided to a business by conversion agents.
_______ b) Resource owners are the businesses that transform resources into products that satisfy consumer desires.
_______ c) Labor resources include the both the physical and intellectual labor of a business's employees.
_______ d) Conversion agents purchase their resources from resource owners.
_______ e) Consumers are the main providers of resources in any market.

Question 79

Which of the following represents effects of an asset use transaction on a company's financial statements?

A) Option A
B) Option B
C) Option C
D) Option D

Question 80

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

A) Option A
B) Option B
C) Option C
D) Option D