Question 1

Conservatism means:

Accepted Answer

A)  not underestimating asset values.
B)  not overestimating liabilities.
C)  using the least optimistic measurement when faced with uncertainty about the value of assets and liabilities.
D)  using the most optimistic measurement when faced with uncertainty about the value of assets and liabilities.E) A) and B)
F) A) and C)

Question 2

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank and used all of the money to re-design its new store.Sweet Smell's balance sheet would show this as:

Accepted Answer

A)  $60,000 under Furnishings & Equipment and $60,000 under Notes Payable.
B)  $60,000 under Supplies and $60,000 under Accounts Payable.
C)  $60,000 under Prepaid Expenses and $60,000 under Accrued Liabilities.
D)  $60,000 under Other Assets and $60,000 under Other Liabilities.E) B) and C)
F) A) and D)

Question 3

The characteristic shared by all liabilities is that they:

Accepted Answer

A)  provide a future economic benefit.
B)  result in an inflow of resources to the company.
C)  always end in the word "payable."
D)  obligate the company to do something in the future.E) A) and B)
F) None of the above

Question 4

The MegaBuck movie studio's name has become famous for adventure movies.Another studio once offered to buy the name for $20 million,but MegaBuck turned down the offer.The MegaBuck balance sheet will show:

Accepted Answer

A)  The company's name under Other Assets,valued at $20 million.
B)  The company's name under Other Assets,valued conservatively at $10 million.
C)  The company's name under Accounts Receivable,valued at $20 million.
D)  The company's name will not be shown as an asset on the balance sheet.E) All of the above
F) C) and D)

Question 5

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 6

All liabilities require that the company sacrifice resources at some time in the future.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 7

If no transactions were posted to a particular asset,liability,or shareholders' equity account during a period then:

Accepted Answer

A)  the amounts from the previous balance sheet are repeated unchanged on the current balance sheet.
B)  the account is left off of the balance sheet.
C)  the account is posted as zero on the current balance sheet for that account.
D)  the words "no change" are entered in the current balance sheet.E) A) and B)
F) A) and C)

Question 8

Prepare a classified balance sheet for Toys for Tots Inc.,,using the following data for June 30,2007.
 $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 115,500 & \text { Other Assets } & \$ 37,200 \
\text { Property and Equipment } & 421,600 & \text { Contributed Capital } & 200,000 \
\text { Inventories } & 16,300 & \text { Unearned Revenue } & 3,900 \
\text { Bonds Payable, due 2012 } & 226,700 & \text { Notes Payable, due 2012 } & 116,500 \
\text { Interest Receivable } & 3,200 & \text { Accounts Receivable } & 183,000 \
\text { Retained Earnings } & 54,700 & \text { Cash } & 56,000
\end{array}$

Accepted Answer

The answer of Prepare a classified balance sheet for Toys...

Question 9

Any item on a balance sheet labelled payable is a liability of that company.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 10

Assets are listed on the balance sheet in order of how soon they are used or can be turned into cash.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the financing a business acquires through borrowing money?

Accepted Answer

A)  Debt.
B)  Equity.
C)  External Exchanges.
D)  Current Assets.E) A) and C)
F) None of the above

Question 12

CheapBooks Incorporated (CI)had the following business activities,for which you are to prepare journal entries.Reference each journal entry to the transaction number,shown below.
1.Shareholders invest $25,000 cash in the corporation.
2.CI purchased $400 of office supplies on credit.
3.CI purchased office equipment for $7,000,paying $2,500 in cash and signing a 30-day note payable for the remainder.
4.CI paid $200 cash on account for office supplies purchased in transaction 2.
5.CI purchased two acres of land for $10,000,signing a 2-year note payable.
6.CI sold one acre of land at one-half of the total cost of the two acres,receiving the full amount or $5,000 in cash.
7.CI made a payment of $5,000 on its 2-year note.

Accepted Answer

None...

Question 13

Which line item(s) on the above balance sheet would be classified as long term?

Accepted Answer

A)  Cash; Supplies; Accounts Payable.
B)  Property,Plant and Equipment; Notes payable
C)  Supplies; Property,Plant and Equipment; Notes Payable.
D)  Contributed Capital; Total Liabilities; Accounts Receviable.E) None of the above
F) B) and D)

Question 14

If total liabilities decreased by $25,000 and shareholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

Accepted Answer

A)  $20,000 increase.
B)  $20,000 decrease.
C)  $30,000 increase.
D)  $30,000 decrease.E) B) and C)
F) None of the above

Question 15

In the above balance sheet how much financing did the shareholders 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) All of the above
F) C) and D)

Question 16

The local branch of the Universal Bank System (UBS) receives money from some of its customers as deposits and lends it to other customers as loans.Which of the following would be true about UBS's financial statements?

Accepted Answer

A)  UBS reports customers' deposits as assets and customers' loans as liabilities.
B)  UBS reports both customers' deposits and customers' loans as assets.
C)  UBS reports customers' deposits as liabilities and customers' loans as assets.
D)  UBS reports both customers' deposits and customers' loans as liabilities.E) B) and D)
F) A) and B)

Question 17

If a purchase of supplies for $400 was mistakenly recorded as a credit to Supplies,but the cash paid for the supplies was correctly recorded,what would be the effect on the accounting equation?

Accepted Answer

Assets would be $800...

Question 18

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Accepted Answer

A)  $2,300.
B)  $71,200.
C)  $66,700.
D)  $(2,300) .E) None of the above
F) C) and D)

Question 19

In a T-account debits appear in what manner?

Accepted Answer

A)  They are on the left under assets but on the right under liabilities and shareholders' equity.
B)  They are always listed on the right.
C)  They are always listed on the left.
D)  They are on the right under assets but on the left under liabilities and shareholders' equity.E) B) and C)
F) A) and C)

Question 20

A summary of account names and account numbers is kept by a company in the table of contents of its annual report.
BT: Knowledge

Accepted Answer

A) True 
 B)False

Exam 2: The Balance Sheet

Correct Answer
verified

All liabilities require that the company sacrifice resources at some time in the future. BT: Comprehension

Correct Answer
verified

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank and used all of the money to re-design its new store.Sweet Smell's balance sheet would show this as:

Correct Answer
verified

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Correct Answer
verified

If no transactions were posted to a particular asset,liability,or shareholders' equity account during a period then:

Correct Answer
verified

A summary of account names and account numbers is kept by a company in the table of contents of its annual report. BT: Knowledge

Correct Answer
verified

In the above balance sheet how much financing did the shareholders of Purrfect Pets Inc.,directly contribute to the company?

Correct Answer
verified

The MegaBuck movie studio's name has become famous for adventure movies.Another studio once offered to buy the name for $20 million,but MegaBuck turned down the offer.The MegaBuck balance sheet will show:

Correct Answer
verified

If total liabilities decreased by $25,000 and shareholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

Correct Answer
verified

Assets are listed on the balance sheet in order of how soon they are used or can be turned into cash. BT: Knowledge

Correct Answer
verified

Which of the following is the financing a business acquires through borrowing money?

Correct Answer
verified

Correct Answer
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None...
View Answer

The characteristic shared by all liabilities is that they:

Correct Answer
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Which line item(s) on the above balance sheet would be classified as long term?

Correct Answer
verified

The local branch of the Universal Bank System (UBS) receives money from some of its customers as deposits and lends it to other customers as loans.Which of the following would be true about UBS's financial statements?

Correct Answer
verified

Conservatism means:

Correct Answer
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Any item on a balance sheet labelled payable is a liability of that company. BT: Comprehension

Correct Answer
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In a T-account debits appear in what manner?

Correct Answer
verified

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount. BT: Comprehension

Correct Answer
verified

If a purchase of supplies for $400 was mistakenly recorded as a credit to Supplies,but the cash paid for the supplies was correctly recorded,what would be the effect on the accounting equation?

Correct Answer
verified
Assets would be $800...
View Answer

Exam 2: The Balance Sheet

Correct AnswerverifiedShow Answer

All liabilities require that the company sacrifice resources at some time in the future. BT: Comprehension

Correct AnswerverifiedShow Answer

The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank and used all of the money to re-design its new store.Sweet Smell's balance sheet would show this as:

Correct AnswerverifiedShow Answer

Cash had a beginning balance of $68,900.During the month,Cash was credited for $16,000 and debited for $18,300.At the end of the month,the balance is:

Correct AnswerverifiedShow Answer

If no transactions were posted to a particular asset,liability,or shareholders' equity account during a period then:

Correct AnswerverifiedShow Answer

A summary of account names and account numbers is kept by a company in the table of contents of its annual report. BT: Knowledge

Correct AnswerverifiedShow Answer

In the above balance sheet how much financing did the shareholders of Purrfect Pets Inc.,directly contribute to the company?

Correct AnswerverifiedShow Answer

The MegaBuck movie studio's name has become famous for adventure movies.Another studio once offered to buy the name for $20 million,but MegaBuck turned down the offer.The MegaBuck balance sheet will show:

Correct AnswerverifiedShow Answer

If total liabilities decreased by $25,000 and shareholders' equity increased by $5,000 during a period of time,then total assets must change by what amount and direction during the same time period?

Correct AnswerverifiedShow Answer

Assets are listed on the balance sheet in order of how soon they are used or can be turned into cash. BT: Knowledge

Correct AnswerverifiedShow Answer

Which of the following is the financing a business acquires through borrowing money?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNone...View AnswerShow Answer

The characteristic shared by all liabilities is that they:

Correct AnswerverifiedShow Answer

Which line item(s) on the above balance sheet would be classified as long term?

Correct AnswerverifiedShow Answer

The local branch of the Universal Bank System (UBS) receives money from some of its customers as deposits and lends it to other customers as loans.Which of the following would be true about UBS's financial statements?

Correct AnswerverifiedShow Answer

Conservatism means:

Correct AnswerverifiedShow Answer

Any item on a balance sheet labelled payable is a liability of that company. BT: Comprehension

Correct AnswerverifiedShow Answer

In a T-account debits appear in what manner?

Correct AnswerverifiedShow Answer

Facebook issues new stock worth $40 million for cash.This would not affect the shareholders' equity on the balance sheet because as new shares are sold the value of existing shares will decline by the same amount. BT: Comprehension

Correct AnswerverifiedShow Answer

If a purchase of supplies for $400 was mistakenly recorded as a credit to Supplies,but the cash paid for the supplies was correctly recorded,what would be the effect on the accounting equation?

Correct AnswerverifiedAssets would be $800...View AnswerShow Answer

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None...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Assets would be $800...
View Answer