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Which of the following is not an accounting transaction?


A) Issued shares of stock to investors in exchange for cash contributions of $4,000.
B) Ordered inventory from suppliers for $3,000.
C) Sold equipment to another company for $3,000 and accepted a note from the company promising payment in 6 months.
D) Borrowed money from the bank by signing a promissory note for $2,000.

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

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The analyze-record-summarize process is applied to daily transactions,to month-end adjustments,and as part of the year-end closing process.

A) True
B) False

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Your company places an order with suppliers for inventory for delivery in two weeks.


A) This is an internal event and it does not affect the balance sheet.
B) This is an activity that does not affect the balance sheet.
C) This is an internal event that affects the balance sheet.
D) This is an external exchange and it affects the balance sheet.

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

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You are pleasantly surprised to discover that a popular actress appears on The Tonight Show wearing your company's jeans.Later,your company's sales increase by $500,000 as a result.When the actress appeared on TV,you would have recorded an asset because the TV appearance was expected to bring future economic benefits to your company.

A) True
B) False

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Debt financing is financing obtained from:


A) stockholders.
B) creditors.
C) selling goods or services on credit.
D) both creditors and stockholders.

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

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Soar Inc.enters into the following transactions: -Stockholders contribute $10,000 cash to a company in exchange for common stock. -The company purchases $5,000 to buy new equipment by paying cash. -The company pays $3,000 to suppliers on account. Required: Part a.Show the effect of these transactions on the basic accounting equation. Part b.Prepare the journal entries that would be used to record the transactions.

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-Use the information above to answer the following question.What is the amount of current assets on the classified balance sheet? A) $113,540. B) $64,040. C) $32,840. D) $82,170. -Use the information above to answer the following question.What is the amount of current assets on the classified balance sheet?


A) $113,540.
B) $64,040.
C) $32,840.
D) $82,170.

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

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Your company purchases equipment for $2 million paying $300,000 in cash and issuing $1.7 million in promissory notes.When the journal entry is posted to the related accounts:


A) $2 million will be credited and $300,000 will be debited to asset accounts; $1.7 million will be debited to liability accounts.
B) $2 million will be debited to asset accounts; $2 million will be credited to liability accounts.
C) $2 million will be debited and $300,000 will be credited to asset accounts; $1.7 million will be credited to liability accounts.
D) $2 million will be credited to asset accounts; $2 million will be debited to liability accounts.

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

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Assets are listed on a classified balance sheet:


A) in alphabetical order.
B) from the largest dollar amount to the lowest dollar amount.
C) beginning with noncurrent assets and ending with current assets.
D) beginning with current assets and starting with Cash.

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

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At the start of the first year of operations,Retained Earnings would be:


A) equal to zero.
B) equal to Common Stock.
C) equal to stockholders' equity.
D) equal to the Net Income.

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

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During its first year of operations, a company entered into the following transactions: -Borrowed $5,000 from the bank by signing a promissory note. -Issued stock to owners for $10,000. -Purchased $1,000 of supplies on account. -Paid $400 to suppliers as payment on account for the supplies purchased. -Use the information above to answer the following question.What is the amount of total assets at the end of the year?


A) $16,000.
B) $5,600.
C) $15,000.
D) $15,600.

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

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A company has $26,000 in its Land account,$10,000 in its Inventory account,and $6,000 in its Notes Payable (short-term) account.If its only other account is Common Stock,what is the balance of that account?


A) $10,000.
B) $42,000.
C) $30,000.
D) $22,000.

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

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Accounts increase on the same side as they appear in the accounting equation: A = L + SE.

A) True
B) False

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The normal balance of any account is the:


A) left side.
B) right side.
C) side which increases that account.
D) side which decreases that account.

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

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Equity financing is financing obtained from:


A) creditors.
B) stockholders.
C) selling goods or services on credit.
D) both creditors and stockholders.

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

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A company borrows money from a bank.The journal entry to record the transaction would include a:


A) credit to Notes Payable and debit to Common Stock.
B) debit to Cash and a credit to Notes Payable.
C) debit to Cash and a credit to Common Stock.
D) credit to Cash and a debit to Notes Payable.

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

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A company purchased land costing $27,000 by paying cash of $6,750 and signing a 90-day note for the balance.The entry to record this transaction would:


A) increase total assets.
B) decrease total liabilities.
C) decrease Common Stock.
D) increase total assets and decrease total liabilities.

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

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Account titles in the chart of accounts are:


A) general purpose and do not indicate the nature of the account.
B) consistent with those used by other companies.
C) linked to account numbers.
D) the names mandated for use by the FASB.

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

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In addition to requiring that the accounting equation remain in balance,the double-entry system also requires that:


A) the number of asset accounts must equal the number of liability and stockholder's equity accounts.
B) for any transaction, only two accounts are affected.
C) for any transaction, both sides of the accounting equation are affected.
D) the total dollar amount of debits must equal the total dollar amount of credits.

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

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Selected accounts for Moonbills Corporation appear below. Required: For each account,indicate the following: Part a.In the first column at the right,indicate the nature of each account,using the following abbreviations: Asset - A,Liability - L,Stockholders' Equity - SE. Part b.In the second column,indicate the normal balance by inserting dr (for debit)or cr (for credit). Selected accounts for Moonbills Corporation appear below. Required: For each account,indicate the following: Part a.In the first column at the right,indicate the nature of each account,using the following abbreviations: Asset - A,Liability - L,Stockholders' Equity - SE. Part b.In the second column,indicate the normal balance by inserting dr (for debit)or cr (for credit).

Correct Answer

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