Question 1

Consider the following account balances of Purrfect Pets,Inc.,as of June 30,Year 3:
  
Required:
Prepare a classified balance sheet at June 30,Year 3.

Accepted Answer

The answer of Consider the following account balances of Purrfect...

Question 2

The creditors' claims to a company's resources are represented by:

Accepted Answer

A)   common stock.
B)   total stockholder's equity.
C)   total liabilities.
D)   retained earnings.E) B) and C)
F) A) and D)

Question 3

Which of the following is not an asset?

Accepted Answer

A)   Cash
B)   Notes Receivable
C)   Common Stock
D)   LandE) B) and D)
F) B) and C)

Question 4

Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?

Accepted Answer

A)   The cost principle
B)   The accounting equation
C)   The separate entity concept
D)   The monetary conceptE) None of the above
F) A) and B)

Question 5

A classified balance sheet shows a subtotal for current assets and current liabilities.

Accepted Answer

A) True 
 B)False

Question 6

How do debits appear in a T-account?

Accepted Answer

A)   They are listed on the left side for asset accounts, but listed on the right side for liabilities and stockholders' equity accounts.
B)   They are always listed on the right side of the account.
C)   They are always listed on the left side of the account.
D)   They are listed on the right side for asset accounts, but listed on the left side for liabilities and stockholders' equity accounts.E) A) and B)
F) B) and C)

Question 7

Your company's president donates a large amount of her own money to charity and receives significant publicity that includes the company's name.How would the benefits of this publicity appear on the balance sheet?

Accepted Answer

A)   It would appear as a current asset.
B)   It would appear as Common Stock.
C)   It would appear as a noncurrent asset.
D)   It would not appear on the balance sheet.E) A) and D)
F) All of the above

Question 8

Which of the following would not be recorded as an accounting transaction?

Accepted Answer

A)   Putting a deposit down on a new vehicle
B)   Hiring a new employee
C)   Receiving cash upon signing a note
D)   Receiving a deposit from a customerE) A) and B)
F) B) and D)

Question 9

The acquisition of equipment in an exchange for a company's stock would increase the current ratio of the company.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about the current ratio is not correct?

Accepted Answer

A)   When making comparisons across companies, it's far easier to express the relationship as a ratio.
B)   The current ratio is used to evaluate a company's ability to pay current obligations.
C)   Having more current assets than current liabilities will yield a current ratio less than 1.0.
D)   A high current ratio suggests good liquidity.E) A) and B)
F) B) and C)

Question 11

Which of the following statements about liabilities is not correct?

Accepted Answer

A)   Liabilities are amounts owed by a business.
B)   Liability accounts have a normal credit balances.
C)   Financing activities may affect the amount of liabilities.
D)   Examples of liabilities include Notes Payable, Common Stock, and Income Tax Payable.E) All of the above
F) A) and B)

Question 12

The trial balance is a financial statement that reports the assets,liabilities,and equity of a business at a point in time.

Accepted Answer

A) True 
 B)False

Question 13

A difference between debt financing and equity financing is that:

Accepted Answer

A)   debt financing must be repaid, while repayment of equity financing is not required.
B)   equity financing must be repaid, while repayment of debt financing is not required.
C)   only debt financing can be used to purchase assets.
D)   only equity financing can be used to purchase assets.E) A) and B)
F) C) and D)

Question 14

Your company pays back $2 million on a loan it had obtained earlier from a bank.

Accepted Answer

A)   Assets decrease by $2 million; liabilities and stockholders' equity are both unchanged.
B)   Assets decrease by $2 million, liabilities decrease by $2 million, and stockholders' equity is unchanged.
C)   Assets decrease by $2 million and liabilities increase by $2 million.
D)   Assets decrease by $2 million, liabilities are unchanged, and stockholders' equity decreases by $2 million.E) A) and B)
F) None of the above

Question 15

The standard formatting for a journal entry lists the dollar amounts for:

Accepted Answer

A)   credits underneath and to the right of the dollar amounts for debits.
B)   debits and credits aligned equally to the right.
C)   debits underneath and to the right of the dollar amounts for credits.
D)   debits and credits aligned equally to the left.E) A) and B)
F) A) and C)

Question 16

A credit would make which of the following accounts decrease?

Accepted Answer

A)   Common Stock
B)   Inventory
C)   Notes Payable
D)   Retained EarningsE) B) and D)
F) None of the above

Question 17

Which of the following statements about the debit/credit framework is correct?

Accepted Answer

A)   All asset accounts have a normal debit balance with the exception of cash which has a normal credit balance.
B)   The Common Stock account is increased by debits.
C)   When payment is made on a liability such as accounts payable, the liability account is decreased with a debit.
D)   The total amount of asset accounts must equal the total amount of liability accounts minus the total amount of stockholders' equity accounts.E) All of the above
F) B) and C)

Question 18

Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year.During the year, assets decreased by $3,500 and liabilities increased by $2,800.
-Use the information above to answer the following question.What is the amount of the change in stockholders' equity during the year?

Accepted Answer

A)   $5,750 increase
B)   $700 decrease
C)   $6,300 decrease
D)   $550 increaseE) A) and B)
F) A) and C)

Question 19

-Use the information above to answer the following question.How much financing did the stockholders of Purrfect Pets,Inc.directly contribute to the company?

Accepted Answer

A)   $117,900.
B)   $662,100.
C)   $780,000.
D)   $1,398,100.E) A) and B)
F) C) and D)

Question 20

What does a business typically receive when it issues stock to owners?

Accepted Answer

A)   Promissory note
B)   Stock certificate
C)   Equipment
D)   CashE) A) and C)
F) B) and D)

Exam 2: Reporting Investing and Financing Results on the Balance Sheet

What does a business typically receive when it issues stock to owners?

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Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year.During the year, assets decreased by $3,500 and liabilities increased by $2,800. -Use the information above to answer the following question.What is the amount of the change in stockholders' equity during the year?

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Which of the following is not an asset?

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The standard formatting for a journal entry lists the dollar amounts for:

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Consider the following account balances of Purrfect Pets,Inc.,as of June 30,Year 3: Required: Prepare a classified balance sheet at June 30,Year 3.

Correct AnswerverifiedShow Answer

Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?

Correct AnswerverifiedShow Answer

Which of the following statements about the current ratio is not correct?

Correct AnswerverifiedShow Answer

How do debits appear in a T-account?

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The creditors' claims to a company's resources are represented by:

Correct AnswerverifiedShow Answer

The trial balance is a financial statement that reports the assets,liabilities,and equity of a business at a point in time.

Correct AnswerverifiedShow Answer

A difference between debt financing and equity financing is that:

Correct AnswerverifiedShow Answer

Which of the following statements about the debit/credit framework is correct?

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Your company's president donates a large amount of her own money to charity and receives significant publicity that includes the company's name.How would the benefits of this publicity appear on the balance sheet?

Correct AnswerverifiedShow Answer

Which of the following would not be recorded as an accounting transaction?

Correct AnswerverifiedShow Answer

The acquisition of equipment in an exchange for a company's stock would increase the current ratio of the company.

Correct AnswerverifiedShow Answer

Your company pays back $2 million on a loan it had obtained earlier from a bank.

Correct AnswerverifiedShow Answer

Which of the following statements about liabilities is not correct?

Correct AnswerverifiedShow Answer

-Use the information above to answer the following question.How much financing did the stockholders of Purrfect Pets,Inc.directly contribute to the company?

Correct AnswerverifiedShow Answer

A classified balance sheet shows a subtotal for current assets and current liabilities.

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A credit would make which of the following accounts decrease?

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