Question 1

Hodges,Inc.had the following assets and liabilities as of September 30,2011:

If assets increased by $3,914 and equity increased by $2,290,what is the increase or decrease in liabilities of Hodges as of October 31,2011?

Accepted Answer

A)  ($1,624) 
B)  $1,624
C)  $6,204
D)  ($6,204)

Question 2

Revenues decrease stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 3

If Liabilities have a balance of $10,000 and Stockholders' Equity has a balance of $60,000,then Assets must have a balance of

Accepted Answer

A)  $50,000.
B)  $60,000.
C)  $70,000.
D)  $10,000.

Question 4

Paying expenses affects which financial statement elements?

Accepted Answer

A)  Assets only
B)  Stockholders' equity only
C)  Assets and stockholders' equity
D)  Assets and liabilities

Question 5

Which of the following is NOT considered to be a liability?

Accepted Answer

A)  Note payable
B)  Accounts receivable
C)  Unearned revenues
D)  Accounts payable

Question 6

Which of the following statements is NOT true about liabilities?

Accepted Answer

A)  Liabilities are debts owed to outsiders.
B)  Account titles of liabilities often include the term "payable."
C)  Cash received before services are performed is considered to be a liability.
D)  Liabilities do not include wages owed to employees of the company.

Question 7

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Two elements? Give examples.

Accepted Answer

Yes to both questions.Examples...

Question 8

Which of the following transactions changes the mix of assets only?

Accepted Answer

A)  Paid for supplies with cash
B)  Borrowed money from Second National Bank
C)  Received money for fees earned
D)  Received a utility bill

Question 9

BNC Company earns revenues and as a result collects cash.Which of the following financial statement elements are increased?

Accepted Answer

A)  Cash only
B)  Stockholders' equity only
C)  Liabilities
D)  Cash and stockholders' equity

Question 10

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

Accepted Answer

A)  Assets and stockholders' equity
B)  Assets and liabilities
C)  Liabilities and stockholders' equity
D)  None of these

Question 11

Which of the following is NOT an element of the financial accounting system?

Accepted Answer

A)  A set of rules for determining the recording of economic events
B)  A framework for preparing financial statements
C)  A set of rules for the stock exchange
D)  Controls to determine whether errors occur during recording

Question 12

Buying equipment for cash affects which accounts?

Accepted Answer

A)  Cash only
B)  Retained earnings only
C)  Equipment and retained earnings
D)  Cash and equipment

Question 13

The basic financial statements do NOT include the

Accepted Answer

A)  income statement.
B)  tax return.
C)  balance sheet.
D)  statement of cash flows.

Question 14

If Assets have a balance of $40,000 and Stockholders' Equity has a balance of $30,000,then Liabilities must have a balance of

Accepted Answer

A)  $70,000.
B)  $30,000.
C)  $40,000.
D)  $10,000.

Question 15

The accounting equation can be expressed: Assets - Liabilities = Revenues.

Accepted Answer

A) True 
 B)False

Question 16

How can a company earn a large net income and have a small balance in retained earnings?

Accepted Answer

The company may pay ...

Question 17

For EFG Co. ,the transaction "Receipt of interest income" would

Accepted Answer

A)  increase total assets.
B)  decrease total assets.
C)  have no effect on total assets.
D)  decrease total liabilities.

Question 18

It is possible for a transaction to change the makeup of assets,but to NOT affect assets in total.

Accepted Answer

A) True 
 B)False

Question 19

Johnson,Inc.issued $15,000 in capital stock in exchange for cash.What is the effect of this transaction?

Accepted Answer

A)  Total assets remain unchanged.
B)  Cash flow from Financing Activities will increase.
C)  Net Income will increase.
D)  Total Retained Earnings will increase.

Question 20

Any given transaction must affect at least two different parts of the accounting equation.

Accepted Answer

A) True 
 B)False

Exam 2: Basic Accounting Concepts

The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions.Is it possible to have a transaction that only impacts one financial element of the equation? Two elements? Give examples.

Correct AnswerverifiedYes to both questions.Examples...View AnswerShow Answer

Which of the following transactions changes the mix of assets only?

Correct AnswerverifiedShow Answer

Paying expenses affects which financial statement elements?

Correct AnswerverifiedShow Answer

Any given transaction must affect at least two different parts of the accounting equation.

Correct AnswerverifiedShow Answer

BNC Company earns revenues and as a result collects cash.Which of the following financial statement elements are increased?

Correct AnswerverifiedShow Answer

For EFG Co. ,the transaction "Receipt of interest income" would

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true about liabilities?

Correct AnswerverifiedShow Answer

If Liabilities have a balance of $10,000 and Stockholders' Equity has a balance of $60,000,then Assets must have a balance of

Correct AnswerverifiedShow Answer

Hodges,Inc.had the following assets and liabilities as of September 30,2011: If assets increased by $3,914 and equity increased by $2,290,what is the increase or decrease in liabilities of Hodges as of October 31,2011?

Correct AnswerverifiedShow Answer

How can a company earn a large net income and have a small balance in retained earnings?

Correct AnswerverifiedThe company may pay ...View AnswerShow Answer

If Assets have a balance of $40,000 and Stockholders' Equity has a balance of $30,000,then Liabilities must have a balance of

Correct AnswerverifiedShow Answer

The accounting equation can be expressed: Assets - Liabilities = Revenues.

Correct AnswerverifiedShow Answer

ABC Company deposited $20,000 in a bank account in return for issuing shares in the corporation.This transaction would affect which two financial statement elements?

Correct AnswerverifiedShow Answer

Buying equipment for cash affects which accounts?

Correct AnswerverifiedShow Answer

Revenues decrease stockholders' equity.

Correct AnswerverifiedShow Answer

It is possible for a transaction to change the makeup of assets,but to NOT affect assets in total.

Correct AnswerverifiedShow Answer

The basic financial statements do NOT include the

Correct AnswerverifiedShow Answer

Which of the following is NOT an element of the financial accounting system?

Correct AnswerverifiedShow Answer

Which of the following is NOT considered to be a liability?

Correct AnswerverifiedShow Answer

Johnson,Inc.issued $15,000 in capital stock in exchange for cash.What is the effect of this transaction?

Correct AnswerverifiedShow Answer

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Yes to both questions.Examples...
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The company may pay ...
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