Filters
Question type
Study Flashcards

The cash payment of interest is classified as a financing activity on the statement of cash flows.

A) True
B) False

Correct Answer

verifed

verified

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during Year 1, its first year in operation. 1) Acquired $12,000 cash by issuing common stock 2) Provided $4,600 of services on account 3) Paid $3,200 cash for operating expenses 4) Collected $3,800 of cash from customers in partial settlement of its accounts receivable 5) Paid a $200 cash dividend to stockholders -What is the balance of the retained earnings that will be reported on the balance sheet as of December 31,Year 1?


A) $1,200
B) $1,000
C) $1,400
D) $13,200

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

On January 1,Year 1,Wilson Company borrowed $70,000 from State Bank.The note stipulates a 3-year term with a 3 percent interest rate.On December 31,Year 1,Wilson recorded an adjusting entry to accrue interest expense.Based solely on these events,indicate whether each of the following statements is true or false.

Premises
The Year 1 income statement is not affected because interest expense has been accrued but not paid.
Accruing interest expense in Year 1 increased a liability.
Accruing interest expense is a claims exchange transaction.
The Year 1 statement of cash flows will show a $70,000 cash inflow from investing activities.
Both assets and equity decreased in Year 1 as a result of this transaction.
Responses
True
False

Correct Answer

The Year 1 income statement is not affected because interest expense has been accrued but not paid.
Accruing interest expense in Year 1 increased a liability.
Accruing interest expense is a claims exchange transaction.
The Year 1 statement of cash flows will show a $70,000 cash inflow from investing activities.
Both assets and equity decreased in Year 1 as a result of this transaction.

[The following information applies to the questions displayed below.] Nelson Company experienced the following transactions during Year 1, its first year in operation. 1) Acquired $12,000 cash by issuing common stock 2) Provided $4,600 of services on account 3) Paid $3,200 cash for operating expenses 4) Collected $3,800 of cash from customers in partial settlement of its accounts receivable 5) Paid a $200 cash dividend to stockholders -What is the amount of net cash flows from operating activities that will be reported on the Year 1 statement of cash flows?


A) $400
B) $600
C) $1,400
D) $1,200

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

The Merry Maids provided cleaning services to Orange Company on account.Which of the following would describe the transaction's effect on the Merry Maids' financial statements? The Merry Maids provided cleaning services to Orange Company on account.Which of the following would describe the transaction's effect on the Merry Maids' financial statements? A) Option A B) Option B C) Option C D) Option D


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

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

Which of the following is not an element of the fraud triangle?


A) Reliance
B) Rationalization
C) Opportunity
D) Pressure

E) B) and D)
F) C) and D)

Correct Answer

verifed

verified

If retained earnings decreased during the year,and no dividends were paid,which of the following statements must be true?


A) Expenses for the year exceeded revenues.
B) The company did not have enough cash to pay its expenses.
C) Total equity decreased.
D) Liabilities increased during the year.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

A

Wyatt Company paid $57,000 in January,Year 2 for salaries that had been earned by employees in December,Year 1.Indicate whether each of the following statements about financial statement effects of the January,Year 2 event is true or false.

Premises
Payment of the salaries in Year 2 increased a liability.
Both assets and equity decreased in Year 2 as a result of this transaction.
The Year 2 statement of changes in stockholders' equity would not be affected because the salaries expense had been recognized at the end of December,Year 1.
Cash flows from operating activities decreased on the Year 2 statement of cash flows.
The income statement for Year 2 is not affected because the salaries expense had been recognized at the end of December,Year 1.
Responses
True
False

Correct Answer

Payment of the salaries in Year 2 increased a liability.
Both assets and equity decreased in Year 2 as a result of this transaction.
The Year 2 statement of changes in stockholders' equity would not be affected because the salaries expense had been recognized at the end of December,Year 1.
Cash flows from operating activities decreased on the Year 2 statement of cash flows.
The income statement for Year 2 is not affected because the salaries expense had been recognized at the end of December,Year 1.

During Year 2,Fancy Foods Incorporated earned $104,000 of revenue on account.The beginning balance in accounts receivable was $26,000,and the ending balance was $4,000.Based solely on this information,what was the amount of cash collected from accounts receivable?


A) $74,000
B) $82,000
C) $126,000
D) $134,000

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

[The following information applies to the questions displayed below.] The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: [The following information applies to the questions displayed below.] The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 1: -What is the amount of total assets that will be reported on the balance sheet as of December 31,Year 1? A) $12,600 B) $13,800 C) $7,200 D) $10,600 -What is the amount of total assets that will be reported on the balance sheet as of December 31,Year 1?


A) $12,600
B) $13,800
C) $7,200
D) $10,600

E) None of the above
F) All of the above

Correct Answer

verifed

verified

Which of the following is an asset use transaction?


A) Purchased land for cash
B) Paid cash for salary expense
C) Invested cash in an interest earning account
D) Accrued salary expense at the end of the period

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

B

The bankruptcies of Enron and WorldCom both indicated the occurrence of major audit failures.

A) True
B) False

Correct Answer

verifed

verified

The term "accrual" describes an earnings event that is recognized before cash is received or paid.

A) True
B) False

Correct Answer

verifed

verified

Which of the following are "matched" under the matching concept?


A) Expenses and revenues
B) Expenses and liabilities
C) Assets and equity
D) Assets and liabilities

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

A

Which of the following is an asset exchange transaction?


A) Issued common stock
B) Accrued salary expense at the end of the accounting period
C) Collected cash on accounts receivable
D) Earned cash revenue for services provided

E) B) and C)
F) A) and B)

Correct Answer

verifed

verified

Frank Company earned $15,000 of cash revenue.Which of the following accurately reflects how this event affects the company's horizontal financial statements model? Frank Company earned $15,000 of cash revenue.Which of the following accurately reflects how this event affects the company's horizontal financial statements model? A) Option A B) Option B C) Option C D) Option D


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

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Accounts receivable is an asset account on the balance sheet.

A) True
B) False

Correct Answer

verifed

verified

The internal controls of a business are designed to reduce the probability of occurrence of fraud.

A) True
B) False

Correct Answer

verifed

verified

Indicate whether each of the following statements regarding the four types of accounting events is true or false.

Premises
Some claims exchange transactions involve an increase in a liability account and a decrease in an equity account.
An asset use transaction cannot result in an increase in equity.
Asset exchange transactions involve an increase in one asset and a decrease in another asset.
An asset source transaction involves an increase in assets and an increase in a corresponding claims account.
Asset exchange transactions cannot affect cash flows.
Responses
True
False

Correct Answer

Some claims exchange transactions involve an increase in a liability account and a decrease in an equity account.
An asset use transaction cannot result in an increase in equity.
Asset exchange transactions involve an increase in one asset and a decrease in another asset.
An asset source transaction involves an increase in assets and an increase in a corresponding claims account.
Asset exchange transactions cannot affect cash flows.

Garrison Company acquired $23,000 by issuing common stock.Which of the following accurately reflects how this event affects the company's horizontal financial statements model? Garrison Company acquired $23,000 by issuing common stock.Which of the following accurately reflects how this event affects the company's horizontal financial statements model? A) Option C B) Option A C) Option D D) Option B


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

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Showing 1 - 20 of 84

Related Exams

Exam 1

An Introduction to Accounting

99 Questions

Exam 3

Accounting for Deferrals

91 Questions

Exam 4

Accounting for Merchandising Businesses

106 Questions

Exam 5

Accounting for Inventories

84 Questions

Exam 6

Internal Control and Accounting for Cash

76 Questions

Exam 7

Accounting for Receivables

93 Questions

Exam 8

Accounting for Long-Term Operational Assets

122 Questions

Exam 9

Accounting for Current Liabilities and Payroll

77 Questions

Exam 10

Accounting for Long-Term Debt

112 Questions

Exam 11

Proprietorships, partnerships, and Corporations

88 Questions

Exam 12

Statement of Cash Flows

85 Questions

Exam 13

The Double-Entry Accounting System

101 Questions

Exam 14

Financial Statement Analysis

108 Questions

Show Answer