Question 1

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

Accepted Answer

When Vantage Corporation purchase stock in Tandem Corporation, Vantage's cash balance will decrease and Tandem's cash balance will increase. Vantage will report it as a cash outflow for investing activities, and Tandem will report it as a cash inflow from financing activities.

Question 2

Cohen 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 Cohen's statements?
A)Paid a cash dividend.
B)Earned cash revenue.
C)Borrowed money from a bank.
D)Issued common stock.

Accepted Answer

Issuing common stock would increase assets (cash) and increase equity (common stock). It would not affect net income, but would be reported as a cash inflow from financing activities on the statement of cash flows.

Question 3

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

Accepted Answer

An asset exchange transaction increases one asset and decreases another, so it does not affect total assets, liabilities or equity. It does not affect the income statement, and can be reported as a cash inflow or outflow on the statement of cash flow as either an operating or an investing activity.

Question 4

Rialto 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 Rialto's statements?
A)Paid a cash dividend.
B)Earned cash revenue.
C)Borrowed money from a bank.
D)None of these.

Accepted Answer

Earning cash revenue must have been the event that affected the financial statements as indicated because it increase revenue and net income on the income statement and was reported as a cash inflow for operating activities on the statement of cash flows.

Question 5

Vegas Co. issued a note to purchase a building.

Accepted Answer

The answer of Vegas Co. issued a note to purchase...

Question 6

Ferguson Co. issued common stock for $50,000 cash.

Accepted Answer

The answer of Ferguson Co. issued common stock for $50,000...

Question 7

Greene Co. paid $211,000 cash in salaries to its employees.

Accepted Answer

The answer of Greene Co. paid $211,000 cash in salaries...

Question 8

Treadwell 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

Accepted Answer

Borrowing cash increases assets (cash) and increases liabilities (notes payable). It does not affect the income statement, but is reported as a cash inflow for financing activities on the statement of cash flows.

Question 9

Walsh Co. paid a $50,000 cash dividend to its owners.

Accepted Answer

The answer of Walsh Co. paid a $50,000 cash dividend...

Question 10

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

Accepted Answer

An asset source transaction increases assets and can either increase liabilities(in the case of borrowing cash) or equity (in the case of issuing stock or earning revenue). It may or may not affect revenue and net income. If the asset that increases is cash, it is reported as a cash inflow on the statement of cash flows, and can be either an operating or a financing activity.

Question 11

Tandem 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

Accepted Answer

Issuing common stock increases assets (cash) and equity (common stock). It does not affect the income statement, but is reported as a cash inflow for financing activities on the statement of cash flows.

Question 12

Rodriguez Co. borrowed $20,000 cash from Century Bank.

Accepted Answer

The answer of Rodriguez Co. borrowed $20,000 cash from Century...

Question 13

Which of the following could 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

Accepted Answer

An asset source transaction is any transaction that results in a net increase in assets. It could be accompanied by an increase in liabilities (as in the case of borrowing cash), an increase in equity with no effect on the income statement (as in the case of issuing common stock), or an increase in equity that does increase net income (as in the case of earning revenue). It could be reported as either a financing activity or an operating activity on the statement of cash flows.

Question 14

Which of the following describes the effects of this transaction on Vantage Corporation's books? 
A)Option A
B)Option B
C)Option C
D)Option D

Accepted Answer

Investing in another company's stock would be an asset exchange transaction that would increase one asset (investments) and decrease another asset (cash). Therefore, it would have no net impact on assets. It would not affect the income statement, but would be reported as a cash outflow for investing activities on the statement of cash flows.

Question 15

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

Accepted Answer

The answer of Name the group that has the primary...

Question 16

Vincent Co. provided services for $25,000 cash.

Accepted Answer

The answer of Vincent Co. provided services for $25,000 cash....

Question 17

Patterson Co. paid $50,000 cash to purchase land.

Accepted Answer

The answer of Patterson Co. paid $50,000 cash to purchase...

Question 18

Burton 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

Accepted Answer

Selling land for cash increases one asset (land) and decreases another asset (cash), so it does not affect overall assets, liabilities or equity. It does not affect the income statement, but is reported as a cash outflow for investing activities on the statement of cash flows.

Question 19

Dover 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 Dover's statements?
A)Paid a cash dividend.
B)Earned cash revenue.
C)Borrowed money from a bank.
D)Incurred a cash expense.

Accepted Answer

Incurring a cash expense would decrease assets (cash) and decrease equity (retained earnings). It would increase expenses and decrease net income, and would be reported as a cash outflow for operating activities on the statement of cash flows.

Question 20

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

Accepted Answer

An asset use transaction decreases assets and decreases either liabilities (in the case of repaying debt) or equity (in the case of paying dividends or expenses). It may or may not increase expenses and decrease net income. If the asset that decreased is cash, it will be reported as an outflow for financing or operating activities on the statement of cash flows.

Quiz 1: An Introduction to Accounting

As a result of this transaction,

Cohen 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 Cohen's statements?

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

Rialto 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 Rialto's statements?

Vegas Co. issued a note to purchase a building.

Ferguson Co. issued common stock for $50,000 cash.

Greene Co. paid $211,000 cash in salaries to its employees.

Treadwell 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?

Walsh Co. paid a $50,000 cash dividend to its owners.

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

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

Rodriguez Co. borrowed $20,000 cash from Century Bank.

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

Which of the following describes the effects of this transaction on Vantage Corporation's books?

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

Vincent Co. provided services for $25,000 cash.

Patterson Co. paid $50,000 cash to purchase land.

Burton 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.

Dover 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 Dover's statements?

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