Question 1

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,
A) net income amounted to $350.
B) total assets increased by $250.
C) cash inflow from operating activities was $350.
D) all of these are correct.

Accepted Answer

Revenue minus expenses equal net income ($950 - $600 = $350). Total assets increased by $250 ($950 - $600 - $100). Cash from operating activities increased by $350 ($950 - $600).

Question 2

Callahan Company earned $1,500 of cash revenue, paid $1,000 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?
A) The net cash flow from operating activities was $500.
B) The net cash flow from investing activities was an outflow or decrease of $200.
C) The net cash flow from operating activities was $300.
D) Cash flows from financing activities were unchanged.

Accepted Answer

Cash revenue and cash expenses are operating activities. Paying dividends is a financing activity. $1,500 revenue - $1,000 expense = $500 cash inflow from operating activities.

Question 3

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's net cash flow from investing activities?
A) Inflow of $40,000
B) Outflow of $37,000
C) Inflow of $28,000
D) Outflow of $12,000

Accepted Answer

Outflow for purchasing equipment $12,000

Question 4

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's cash flow from financing activities?
A) Inflow of $37,000
B) Outflow of $15,000
C) Inflow of $47,000
D) Outflow of $3,000

Accepted Answer

$40,000 inflow from issuing stock + $25,000 inflow from borrowing - $15,000 outflow for loan repayment - $3,000 for dividends = $47,000 inflow

Question 5

Grant Company purchased a delivery van for cash. The cash flow from this event should be shown on the statement of cash flows as
A) an operating activity that increases cash.
B) a financing activity that decreases cash.
C) an investing activity that decreases cash.
D) an operating activity that decreases cash.

Accepted Answer

Paying cash to purchase a long-lived asset is a cash outflow for investing activities.

Question 6

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's net cash flow from investing activities?
A) Inflow of $40,000
B) Outflow of $37,000
C) Inflow of $28,000
D) Outflow of $12,000

Accepted Answer

Outflow for purchasing equipment $12,000

Question 7

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) Statement of cash flows.
D) Income statement.

Accepted Answer

The income statement matches asset increases from operations (revenues) with asset decreases from operations (expenses).

Question 8

Petras Company engaged in the following transactions during 2012, 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 $600 of revenues.
4) Paid expenses of $250.
5) Paid a $50 dividend.
During 2013, Petras 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.
Petras Company's net cash inflow from operating activities for 2012 is
A) $600.
B) $550.
C) $350.
D) $300.

Accepted Answer

$600 inflow from revenues - $250 outflow for expenses = $350 net cash flow

Question 9

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's cash flow from financing activities?
A) Inflow of $37,000
B) Outflow of $15,000
C) Inflow of $47,000
D) Outflow of $3,000

Accepted Answer

$40,000 inflow from issuing stock + $25,000 inflow from borrowing - $15,000 outflow for loan repayment - $3,000 for dividends = $47,000 inflow

Question 10

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's net cash flow from operating activities?
A) Inflow of $5,000
B) Inflow of $8,000
C) Inflow of $17,000
D) Inflow of $33,000

Accepted Answer

$38,000 inflow from consulting services - $9,000 outflow for rent expense - $21,000 outflow for salaries expense = $8,000 inflow

Question 11

Petras Company engaged in the following transactions during 2012, 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 $600 of revenues.
4) Paid expenses of $250.
5) Paid a $50 dividend.
During 2013, Petras 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.
Petras Company's net cash inflow from operating activities for 2012 is
A) $600.
B) $550.
C) $350.
D) $300.

Accepted Answer

$600 inflow from revenues - $250 outflow for expenses = $350 net cash flow

Question 12

Retained Earnings at the beginning and ending of the accounting period was $300 and $700, 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.

Accepted Answer

Beginning retained earnings + Revenues - Expenses - Dividends = Ending retained earnings$300 + $1,100 - Expenses - $200 = $700Expenses = $500

Question 13

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) Statement of cash flows.
D) Income statement.

Accepted Answer

The income statement matches asset increases from operations (revenues) with asset decreases from operations (expenses).

Question 14

Grant Company purchased a delivery van for cash. The cash flow from this event should be shown on the statement of cash flows as
A) an operating activity that increases cash.
B) a financing activity that decreases cash.
C) an investing activity that decreases cash.
D) an operating activity that decreases cash.

Accepted Answer

Paying cash to purchase a long-lived asset is a cash outflow for investing activities.

Question 15

Yi Company began operations on January 1, 2013. During 2013, 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 $38,000
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 Yi's net cash flow from operating activities?
A) Inflow of $5,000
B) Inflow of $8,000
C) Inflow of $17,000
D) Inflow of $33,000

Accepted Answer

$38,000 inflow from consulting services - $9,000 outflow for rent expense - $21,000 outflow for salaries expense = $8,000 inflow

Question 16

Young Company provided services to a customer for $6,500 cash. As a result of this event,
A) total assets decreased.
B) total liabilities increased.
C) net income increased.
D) cash flow from financing activities increased.

Accepted Answer

Providing services to a customer for cash increases assets and equity on the balance sheet. It also increases revenue, and therefore, net income on the income statement, and increases cash from operating activities on the statement of cash flows.

Question 17

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,
A) net income amounted to $350.
B) total assets increased by $250.
C) cash inflow from operating activities was $350.
D) all of these are correct.

Accepted Answer

Revenue minus expenses equal net income ($950 - $600 = $350). Total assets increased by $250 ($950 - $600 - $100). Cash from operating activities increased by $350 ($950 - $600).

Question 18

Young Company provided services to a customer for $6,500 cash. As a result of this event,
A) total assets decreased.
B) total liabilities increased.
C) net income increased.
D) cash flow from financing activities increased.

Accepted Answer

Providing services to a customer for cash increases assets and equity on the balance sheet. It also increases revenue, and therefore, net income on the income statement, and increases cash from operating activities on the statement of cash flows.

Question 19

Callahan Company earned $1,500 of cash revenue, paid $1,000 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?
A) The net cash flow from operating activities was $500.
B) The net cash flow from investing activities was an outflow or decrease of $200.
C) The net cash flow from operating activities was $300.
D) Cash flows from financing activities were unchanged.

Accepted Answer

Cash revenue and cash expenses are operating activities. Paying dividends is a financing activity. $1,500 revenue - $1,000 expense = $500 cash inflow from operating activities.

Question 20

Retained Earnings at the beginning and ending of the accounting period was $300 and $700, 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.

Accepted Answer

Beginning retained earnings + Revenues - Expenses - Dividends = Ending retained earnings$300 + $1,100 - Expenses - $200 = $700Expenses = $500

Quiz 1: An Introduction to Accounting

During 2013, Chi Company earned $950 of cash revenue, paid $600 of cash expenses, and paid a $100 cash dividend to its owners. Based on this information alone,

Callahan Company earned $1,500 of cash revenue, paid $1,000 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?

Grant Company purchased a delivery van for cash. The cash flow from this event should be shown on the statement of cash flows as

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

Retained Earnings at the beginning and ending of the accounting period was $300 and $700, respectively. If revenues were $1,100 and dividends paid to stockholders were $200, expenses for the period must have been