Question 1

A company incurred $60,000 (to be paid next year) for the current year's advertising activities.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $60,000 decrease in Liabilities; $60,000 increase in Stockholders' Equity
B) $60,000 increase in Assets; $60,000 increase in Liabilities; No effect on Stockholders' Equity
C) $60,000 increase in Assets; No effect on Liabilities; $60,000 increase in Stockholders' Equity
D) No effect on Assets; $60,000 increase in Liabilities; $60,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fd_91a2_90da_0bffae795c19_TBCB1007_00

Question 2

A company incurred $180,000 (to be paid next year) for the current year's advertising activities.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $180,000 decrease in Liabilities; $180,000 increase in Stockholders' Equity
B) $180,000 increase in Assets; $180,000 increase in Liabilities; No effect on Stockholders' Equity
C) $180,000 increase in Assets; No effect on Liabilities; $180,000 increase in Stockholders' Equity
D) No effect on Assets; $180,000 increase in Liabilities; $180,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fd_91a3_90da_050a296b71e9_TBCB1007_00

Question 3

A company incurred $40,000 (to be paid next year) for the current year's insurance coverage.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $40,000 decrease in Liabilities; $40,000 increase in Stockholders' Equity
B) $40,000 increase in Assets; $40,000 increase in Liabilities; No effect on Stockholders' Equity
C) $40,000 increase in Assets; No effect on Liabilities; $40,000 increase in Stockholders' Equity
D) No effect on Assets; $40,000 increase in Liabilities; $40,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fd_b8b4_90da_7d15bfc65c1e_TBCB1007_00

Question 4

A company incurred $120,000 (to be paid next year) for the current year's insurance coverage.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $120,000 decrease in Liabilities; $120,000 increase in Stockholders' Equity
B) $120,000 increase in Assets; $120,000 increase in Liabilities; No effect on Stockholders' Equity
C) $120,000 increase in Assets; No effect on Liabilities; $120,000 increase in Stockholders' Equity
D) No effect on Assets; $120,000 increase in Liabilities; $120,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fd_b8b5_90da_9f2d4103b24e_TBCB1007_00

Question 5

To take advantage of a zero percent rent increase for the coming year, a company paid, at year-end, $150,000 rent for the first three months of the next year.
What would the effect of this transaction on the company's year-end accounting equation?
A) No effect on Assets; $150,000 decrease in Liabilities; $150,000 increase in Stockholders' Equity
B) $150,000 increase in Assets; $150,000 increase in Liabilities; No effect on Stockholders' Equity
C) $150,000 increase in Assets; No effect on Liabilities; $150,000 increase in Stockholders' Equity
D) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity

Accepted Answer

11ee7640_e1fd_b8b6_90da_75c5b3fe9492_TBCB1007_00

Question 6

To take advantage of a zero percent rent increase for the coming year, a company paid, at year-end, $450,000 rent for the first three months of the next year.
What would the effect of this transaction on the company's year-end accounting equation?
A) No effect on Assets; $450,000 decrease in Liabilities; $450,000 increase in Stockholders' Equity
B) $450,000 increase in Assets; $450,000 increase in Liabilities; No effect on Stockholders' Equity
C) $450,000 increase in Assets; No effect on Liabilities; $450,000 increase in Stockholders' Equity
D) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity

Accepted Answer

11ee7640_e1fd_dfc7_90da_b56f5b1374d3_TBCB1007_00

Question 7

A company received a $24,000 payment for services to be performed over the next few months.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $24,000 decrease in Liabilities; $24,000 increase in Stockholders' Equity
B) $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders' Equity
C) $24,000 increase in Assets; No effect on Liabilities; $24,000 increase in Stockholders' Equity
D) No effect on Assets; $24,000 increase in Liabilities; $24,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fd_dfc8_90da_5956c3cdd5df_TBCB1007_00

Question 8

A company received a $72,000 payment for services to be performed over the next few months.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $72,000 decrease in Liabilities; 72,000 increase in Stockholders' Equity
B) $72,000 increase in Assets; $72,000 increase in Liabilities; No effect on Stockholders' Equity
C) $72,000 increase in Assets; No effect on Liabilities; $72,000 increase in Stockholders' Equity
D) No effect on Assets; $72,000 increase in Liabilities; $72,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_06d9_90da_3d744b267e20_TBCB1007_00

Question 9

A company received $11,000 cash in exchange for 200 shares of the company's common stock.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $11,000 decrease in Liabilities; $11,000 increase in Stockholders' Equity
B) $11,000 increase in Assets; $11,000 increase in Liabilities; No effect on Stockholders' Equity
C) $11,000 increase in Assets; No effect on Liabilities; $11,000 increase in Stockholders' Equity
D) No effect on Assets; $11,000 increase in Liabilities; $11,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_06da_90da_19a766f74db5_TBCB1007_00

Question 10

A company received $33,000 cash in exchange for 200 shares of the company's common stock.
What would the effect of this transaction on the current year's accounting equation?
A) No effect on Assets; $33,000 decrease in Liabilities; $33,000 increase in Stockholders' Equity
B) $33,000 increase in Assets; $33,000 increase in Liabilities; No effect on Stockholders' Equity
C) $33,000 increase in Assets; No effect on Liabilities; $33,000 increase in Stockholders' Equity
D) No effect on Assets; $33,000 increase in Liabilities; $33,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_2deb_90da_cd312377108f_TBCB1007_00

Question 11

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $10,000. Annual interest on the loan (note payable) is 10%, payable when the note is due.
What would the effect of this transaction on the company's current month accounting equation?
A) No effect on Assets; $10,000 decrease in Liabilities; $10,000 increase in Stockholders' Equity
B) $10,000 increase in Assets; $10,000 increase in Liabilities; No effect on Stockholders' Equity
C) $10,000 increase in Assets; No effect on Liabilities; $10,000 increase in Stockholders' Equity
D) No effect on Assets; $10,000 increase in Liabilities; $10,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_2dec_90da_8b910c79df0d_TBCB1007_00

Question 12

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $30,000. Annual interest on the loan (note payable) is 10%, payable when the note is due.
What would the effect of this transaction on the company's current month accounting equation?
A) No effect on Assets; $30,000 decrease in Liabilities; $30,000 increase in Stockholders' Equity
B) $30,000 increase in Assets; $30,000 increase in Liabilities; No effect on Stockholders' Equity
C) $30,000 increase in Assets; No effect on Liabilities; $30,000 increase in Stockholders' Equity
D) No effect on Assets; 30,000 increase in Liabilities; $30,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_54fd_90da_5bdad1a75987_TBCB1007_00

Question 13

At the beginning of the month, a company purchased a new truck for $45,000, paying $21,000 cash and agreeing to pay the balance over 12 months through a no-interest financing offer provided by the car dealer. The entry to record the purchase of the truck is recorded at month-end.
What would the effect of this transaction on the company's current month-end accounting equation? (Hint: First financing payment was made before current month-end.)
A) No effect on Assets; $45,000 decrease in Liabilities; $45,000 increase in Stockholders' Equity
B) $22,000 increase in Assets; $22,000 increase in Liabilities; No effect on Stockholders' Equity
C) $45,000 increase in Assets; No effect on Liabilities; $45,000 increase in Stockholders' Equity
D) No effect on Assets; $24,000 increase in Liabilities; $24,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_54fe_90da_f9e792b0aafb_TBCB1007_00 11ee7640_e1fe_54ff_90da_d7a5e5cee25d_TBCB1007_00 11ee7640_e1fe_5500_90da_3baaa35070b0_TBCB1007_00 Total change in assets = $45,000 + ($23,000) = $22,000

Question 14

At the beginning of the month, a company purchased a new truck for $135,000, paying $63,000 cash and agreeing to pay the balance over 12 months through a no-interest financing offer provided by the car dealer. The entry to record the purchase of the truck is recorded at month-end.
What would the effect of this transaction on the company's current month-end accounting equation? (Hint: First financing payment was made before current month-end.)
A) No effect on Assets; $135,000 decrease in Liabilities; $135,000 increase in Stockholders' Equity
B) $66,000 increase in Assets; $66,000 increase in Liabilities; No effect on Stockholders' Equity
C) $135,000 increase in Assets; No effect on Liabilities; $135,000 increase in Stockholders' Equity
D) No effect on Assets; $72,000 increase in Liabilities; $72,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_7c11_90da_a5be822b5c69_TBCB1007_00 11ee7640_e1fe_7c12_90da_ffdca756ee4f_TBCB1007_00 11ee7640_e1fe_7c13_90da_afde87076c01_TBCB1007_00 Total change in assets = $135,000 + ($69,000) = $66,000

Question 15

A company performed $8,635 of services and received $3,000 in cash with the remaining amount to be paid in 60 days with no interest.
What would the effect of this transaction on the company's current month-end accounting equation?
A) $3,000 increase in Assets; $5,635 decrease in Liabilities; $8,635 increase in Stockholders' Equity
B) $8,635 increase in Assets; $8,635 increase in Liabilities; No effect on Stockholders' Equity
C) $5,635 increase in Assets; No effect on Liabilities; $5,635 increase in Stockholders' Equity
D) $8,635 increase in Assets; No effect on Liabilities; $8,635 increase in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_7c14_90da_91447ec0d2fb_TBCB1007_00 Total change in assets = $3,000 + $5,635 = $8,635

Question 16

A company performed $25,905 of services and received $9,000 in cash with the remaining amount to be paid in 60 days with no interest.
What would the effect of this transaction on the company's current month-end accounting equation?
A) $9,000 increase in Assets; $16,905 decrease in Liabilities; $25,905 increase in Stockholders' Equity
B) $25,905 increase in Assets; $25,905 increase in Liabilities; No effect on Stockholders' Equity
C) $16,905 increase in Assets; No effect on Liabilities; $16,905 increase in Stockholders' Equity
D) $25,905 increase in Assets; No effect on Liabilities; $25,905 increase in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_a325_90da_3f3b24a1ee18_TBCB1007_00 Total change in assets = $9,000 + $16,905 = $25,905

Question 17

A company paid employee wages of $24,000 for the month.
What would the effect of this transaction on the current month's accounting equation?
A) No effect on Assets; $24,000 decrease in Liabilities; $24,000 increase in Stockholders' Equity
B) $24,000 increase in Assets; $24,000 increase in Liabilities; No effect on Stockholders' Equity
C) $24,000 decrease in Assets; No effect on Liabilities; $24,000 decrease in Stockholders' Equity
D) $24,000 decrease in Assets; $24,000 decrease in Liabilities; No effect on Stockholders' Equity

Accepted Answer

11ee7640_e1fe_a326_90da_6962aab69604_TBCB1007_00

Question 18

A company paid employee wages of $72,000 for the month.
What would the effect of this transaction on the current month's accounting equation?
A) No effect on Assets; $72,000 decrease in Liabilities; $72,000 increase in Stockholders' Equity
B) $72,000 increase in Assets; $72,000 increase in Liabilities; No effect on Stockholders' Equity
C) $72,000 decrease in Assets; No effect on Liabilities; $72,000 decrease in Stockholders' Equity
D) $72,000 decrease in Assets; $72,000 decrease in Liabilities; No effect on Stockholders' Equity

Accepted Answer

11ee7640_e1fe_ca37_90da_9ded6ee5c606_TBCB1007_00

Question 19

A company received payment of $10,000 from a customer that had previously received services performed on account.
What would the effect of this transaction on the company's current month accounting equation?
A) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity
B) $10,000 increase in Assets; $10,000 increase in Liabilities; No effect on Stockholders' Equity
C) $10,000 increase in Assets; No effect on Liabilities; $10,000 increase in Stockholders' Equity
D) No effect on Assets; $10,000 increase in Liabilities; $10,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_ca38_90da_dbcb14b911d2_TBCB1007_00

Question 20

A company received payment of $30,000 from a customer that had previously received services performed on account.
What would the effect of this transaction on the company's current month accounting equation?
A) No effect on Assets; No effect on Liabilities; No effect on Stockholders' Equity
B) $30,000 increase in Assets; $30,000 increase in Liabilities; No effect on Stockholders' Equity
C) $30,000 increase in Assets; No effect on Liabilities; $30,000 increase in Stockholders' Equity
D) No effect on Assets; $30,000 increase in Liabilities; $30,000 decrease in Stockholders' Equity

Accepted Answer

11ee7640_e1fe_f149_90da_af4c2fc6e393_TBCB1007_00

Quiz 2: Processing Accounting Information

A company incurred $60,000 (to be paid next year) for the current year's advertising activities. What would the effect of this transaction on the current year's accounting equation?

A company incurred $180,000 (to be paid next year) for the current year's advertising activities. What would the effect of this transaction on the current year's accounting equation?

A company incurred $40,000 (to be paid next year) for the current year's insurance coverage. What would the effect of this transaction on the current year's accounting equation?

A company incurred $120,000 (to be paid next year) for the current year's insurance coverage. What would the effect of this transaction on the current year's accounting equation?

To take advantage of a zero percent rent increase for the coming year, a company paid, at year-end, $150,000 rent for the first three months of the next year. What would the effect of this transaction on the company's year-end accounting equation?

To take advantage of a zero percent rent increase for the coming year, a company paid, at year-end, $450,000 rent for the first three months of the next year. What would the effect of this transaction on the company's year-end accounting equation?

A company received a $24,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year's accounting equation?

A company received a $72,000 payment for services to be performed over the next few months. What would the effect of this transaction on the current year's accounting equation?

A company received $11,000 cash in exchange for 200 shares of the company's common stock. What would the effect of this transaction on the current year's accounting equation?

A company received $33,000 cash in exchange for 200 shares of the company's common stock. What would the effect of this transaction on the current year's accounting equation?

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $10,000. Annual interest on the loan (note payable) is 10%, payable when the note is due. What would the effect of this transaction on the company's current month accounting equation?

To meet its cash flow needs, a company obtained a 6 month bank loan in the amount of $30,000. Annual interest on the loan (note payable) is 10%, payable when the note is due. What would the effect of this transaction on the company's current month accounting equation?

A company performed $8,635 of services and received $3,000 in cash with the remaining amount to be paid in 60 days with no interest. What would the effect of this transaction on the company's current month-end accounting equation?

A company performed $25,905 of services and received $9,000 in cash with the remaining amount to be paid in 60 days with no interest. What would the effect of this transaction on the company's current month-end accounting equation?

A company paid employee wages of $24,000 for the month. What would the effect of this transaction on the current month's accounting equation?

A company paid employee wages of $72,000 for the month. What would the effect of this transaction on the current month's accounting equation?

A company received payment of $10,000 from a customer that had previously received services performed on account. What would the effect of this transaction on the company's current month accounting equation?

A company received payment of $30,000 from a customer that had previously received services performed on account. What would the effect of this transaction on the company's current month accounting equation?