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Exam 1: An Introduction to Accounting

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Question 41

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The statement of changes in stockholders' equity presents

A) an explanation of the changes in the beginning and ending balances of stockholders' equity.
B) a comparison of the benefits and the sacrifices a company experiences from its operations.
C) information in three categories including operating, investing, and financing activities.
D) a list of a company's assets and the sources of those assets.

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

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Question 42

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The types of resources needed by a business are financial,physical,and labor resources.

A) True
B) False

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Question 43

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Indicate whether each of the following statements about equity is true or false. ________ a)Expenses decrease retained earnings. ________ b)stockholders' equity and liabilities can be viewed either as sources of assets or claims to assets of the business. ________ c)Retained earnings is increased by loans received from a bank. ________ d)Dividends paid to stockholders decrease common stock. ________ e)Generally,assets are reported at the actual price paid for them when purchased regardless of subsequent changes in market value.

Chico Company experienced an accounting event that affected its accounting equation as indicated below: $\begin{array} { | c | c | c | c | c | c | c | } \hline \text { Assets } & = & \text { Liabilities } & + & \begin{array} { c } \text { Commnn } \\\text { Strok }\end{array} & + & \begin{array} { c } \text { Retained } \\\text { Eurnings }\end{array} \\\hline + & = & \text { NA } & + & + & + & \text { NA } \\\hline\end{array}$ Which of the following accounting events could have caused these effects on Chico's statements?

Which of the following describes the effects of an asset use transaction on the accounting equation? $\begin{array}{|c|c|c|c|c|c|}\hline & \text { Assets } & = & \text { Liab. } & + & \text { Equity } \\\hline \mathrm{A} & + & = & + & + & \text { NA } \\\hline \mathrm{B} & - & = & \mathrm{NA} & + & - \\\hline \mathrm{C} . & +- & = & \mathrm{NA} & + & \mathrm{NA} \\\hline \mathrm{D} . & \mathrm{NA} & = & + & + & \mathrm{NA} \\\hline\end{array}$

[The following information applies to the questions displayed below.] Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) 1) Acquired $6,000 cash from issuing common stock. 2) Borrowed $4,400 from a bank. 3) Earned $6,200 of revenues. 4) Incurred $4,800 in expenses. "5) Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.) " 1) Acquired an additional $1,000 cash from the issue of common stock. 2) Repaid $2,600 of its debt to the bank. 3) Earned revenues, $9,000. 4) Incurred expenses of $5,500. 5) Paid dividends of $1,280. -What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?

[The following information applies to the questions displayed below.] Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues. 4) Paid expenses of $250. "5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.) " 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750. 4) Incurred expenses of $360. 5) Paid dividends of $100. -What is the net cash inflow from operating activities that will be reported on Packard's statement of cash flows for Year 1?

Tandem Company borrowed $32,000 of cash from a local bank.Which of the following choices accurately reflects how this event affects the accounting equation? $\begin{array}{|c|c|c|c|c|c|c|c|}\hline & \text { Assets } & = & \text { Liabilities } & + & \begin{array}{c}\text { Common } \\\text { Stock }\end{array} & + & \begin{array}{c}\text { Retained } \\\text { Earnings }\end{array} \\\hline \text { A } & \text { NA } & = & 32,000 & + & \text { NA } & + & 32,000 \\\hline \mathrm{B} . & 32,000 & = & \mathrm{NA} & + & 32,000 & + & \mathrm{NA} \\\hline \mathrm{C} . & 32,000 & = & \mathrm{NA} & + & \mathrm{NA} & + & 32,000 \\\hline \mathrm{D} . & 32,000 & = & 32,000 & + & \mathrm{NA} & + & \mathrm{NA} \\\hline\end{array}$

International accounting standards are formulated by the IASB.What does that acronym stand for?

Jackson Company paid $500 cash for salary expenses.Which of the following accurately reflects how this event affects the company's accounting equation? $\begin{array}{|c|c|c|c|c|c|}\hline & \text { Assets } & = & \text { Liab. } & + & \text { Equity } \\\hline \text { A } & 500 & = & 500 & + & \text { NA } \\\hline \text { B. } & (500) & = & \text { NA } & + & (500) \\\hline \text { C. } & (500) & = & (500) & + & \text { NA } \\\hline \text { D. } & (500) & = & \text { NA } & + & 500 \\\hline\end{array}$

Which of the following would not describe the effects of an asset source transaction on the accounting equation? $\begin{array} { | l | c | l | c | c | c | c | c | } \hline & \text { Assets } & = & \text { Linbilities } & + & \begin{array} { c } \text { Corrunon } \\\text { Strek }\end{array} & + & \begin{array} { c } \text { Retained } \\\text { Earnings }\end{array} \\\hline \text { A } & + & = & + & + & \text { NA } & + & \text { NA } \\\hline \text { B. } & + & = & \text { NA } & + & \text { NA } & + & + \\\hline \text { C. } & + & = & \text { NA } & + & + & + & \text { NA } \\\hline \text { D. } & + - & = & \text { NA } & + & \text { NA } & + & \text { NA } \\\hline\end{array}$

An asset source transaction increases a business's assets and the claims to assets.

A business and the person who owns the business are separate reporting entities.

Chow Company earned $1,500 of cash revenue,paid $1,200 for cash expenses,and paid a $200 cash dividend to its owners.Which of the following statements is true?

Which of the following cash transactions would not affect total assets?

Which of the following statements is false regarding managerial accounting information?

Liabilities are reported on which of the following financial statement(s) ?

Yi Company provided services to a customer for $5,500 cash.Based on this information alone,which of the following statements is true?

A net loss occurs when

Ballard Company reported assets of $500 and liabilities of $200.What amount will Ballard's report for stockholders' equity?