FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Investing and Financing Decisions and the Balance Sheet

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following correctly describes retained earnings?

A) It is the cumulative net income of a company.
B) It represents the investments by stockholders in a company.
C) It equals total assets minus total liabilities.
D) It is the cumulative net income of a company less dividend declarations.

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

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following would result when a company sells additional shares of stock for cash?

A) A noncurrent liability and a financing cash flow are created.
B) Contributed capital increases and a financing cash flow results.
C) A noncurrent liability and an investing cash flow are created.
D) Contributed capital increases and an investing cash flow results.

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

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

Which of the following would be classified as investing cash flows on a cash flow statement? 1.Acquired a building by signing a long-term mortgage payable. 2) Lending cash to others. 3) Issuing stock for cash. 4) Purchasing long-term assets for cash. 5) Selling stock investments for cash.

Current liabilities are defined as obligations to be paid within six months. Bloom's Remember

Which of the following would result when a company purchases a factory building using cash?

Which of the following transactions will not change a company's total stockholders' equity?

Which of the following describes the impact on the balance sheet when cash is received from the collection of an account receivable?

Which of the following would result when a company borrows cash and signs a note payable due in two years?

Borrowing cash from a bank would result in which of the following?

The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivable $6,000; Inventory $48,000; Long-term notes receivable $2,000; Equipment $96,000; Factory Building $180,000; Intangible assets $6,000; Accounts payable $30,000; Accrued liabilities payable $4,000; Short-term notes payable $14,000; Long-term notes payable $92,000; Contributed capital $180,000; Retained earnings $60,000. What is Pioneer's current ratio?

Which of the following assumptions implies that the assets and liabilities of the business are accounted for separately from the assets and liabilities of the owners?

The recording of a journal entry precedes the posting to the general ledger.

Complete the following schedule for Red Eye Company. $\begin{array} { | l | l | l | l | } \hline \text { Transaction } & \text { Assets } & \text { Liabilities } & \begin{array} { l } \text { Stockholders' } \\\text { Equity }\end{array} \\\hline \text { Beginning balances } & \$ 200,000 & \$ 80,000 & \$ 120,000 \\\hline \begin{array} { l } \text { Borrowed } \$ 20,000 \text { cash by signing } \\\text { a note payable with a bank. }\end{array} & & & \\\hline \begin{array} { l } \text { Collected accounts receivable for } \\\text { cash, } \$ 7,000 .\end{array} & & & \\\hline \begin{array} { l } \text { Paid accounts payable, } \$ 8,000 \\\text { cash. }\end{array} & & & \\\hline \begin{array} { l } \text { Purchased office supplies on } \\\text { credit, \$2,000. }\end{array} & & & \\\hline \begin{array} { l } \text { Sold stock to new investors for } \\\text { \$20,000 cash. }\end{array} & & & \\\hline \begin{array} { l } \text { Paid income taxes payable of } \\\text { \$12,000. }\end{array} & & & \\\hline \text { Ending balances } & & & \\\hline\end{array}$

Which of the following events will cause retained earnings to increase?

The stockholders' equity section of a balance sheet includes contributed capital and retained earnings.

Which of the following would not be considered a current asset?

Stockholders' equity includes the financing provided by owners.

Which of the following describes the impact of purchasing supplies for cash on the balance sheet?

A company's assets and stockholders' equity both increase when the company sells additional shares of stock in exchange for cash.

The Alex Company,a consulting firm,recorded the following selected business transactions during May,2011.Indicate whether each transaction would increase,decrease,or have no effect on the total assets of the company. $\begin{array}{l}\begin{array}{l}\text { 1. Issued capital stock in exchange for cash contributed by owners } \\\text {2. Paid cash on accounts payable to a supplier. } \\\text {3. Loaned money to an employee } \\\text {4. Borrowed money from the bank on a promissory note payable} \\\text { 5. Collected cash on accounts receivable} \\\text { 6. Purchased a building by using cash and signing a mortgage payable} \\\text { 7. Purchased office supplies on credit} \\\text { 8. Purchased office supplies for cash}\\\end{array}\begin{array}{rl}\text {Increase 1}\\\text {No effect 8}\\\text {Increase 7}\\\text {Decrease 2}\\\text {No effect 5}\\\text {Increase 4}\\\text {No effect 3}\\\text {Increase 6}\\\end{array}\end{array}$