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Exam 2: Investing and Financing Decisions and the Accounting System

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Question 31

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The following journal entries with the amounts omitted were taken from the records of Lena Company: Write a brief explanation for each of the above transactions.

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1.Stockholders invested cash into the co...

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Question 32

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Which of the following direct effects on the accounting equation is not possible as a result of a single business transaction which impacts only two accounts?

A) An increase in an asset and a decrease in another asset.
B) An increase in an asset and an increase in stockholders' equity.
C) A decrease in stockholders' equity and an increase in an asset.
D) An increase in a liability and an increase in an asset.

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

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Question 33

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Which of the following transactions would create an increase in cash from a financing activity?

Stockholders' equity reflects the financing provided by owners.

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Which of the following journal entries is correct when a business entity purchases a building by paying cash and by signing a note payable for the balance?

Issuing stock in exchange for cash creates an increase in cash from a financing activity.

Which of the following would not be included under the account category of expenses within the chart of accounts?

In what order are current assets listed on a balance sheet?

Which of the following transactions will cause both the left and right side of the accounting equation to decrease?

At the beginning of April,Warren Corporation's assets totaled $240,000 and liabilities totaled $60,000.During April the following summarized transactions occurred: Additional shares of stock were sold for $20,000 cash. A building costing $95,000 was purchased using $10,000 cash and by signing an $85,000 long-term note payable. Short-term investments costing $9,000 were purchased using cash. $10,000 was paid to an employee as a loan;the employee signed a six-month note in exchange for the loan. How much are Warren's total liabilities at the end of April?

Purchasing supplies for cash results in an increase in total assets for the purchasing company.

Which of the following would be classified as financing cash flows on a statement of cash flows? 1.Paying cash dividends. 2.Lending cash to others. 3.Issuing stock for cash. 4.Purchasing long-term assets for cash.

What is the primary objective of financial reporting?

Which of the following transactions would not be considered an external exchange?

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 account balances would not be included in the calculation of the current ratio?

On January 1,2019,Dr.Beth Hill started a new professional corporation,Beth Hill,P.C. ,to practice medicine with an initial investment of $100,000 in exchange for 20,000 shares of $2 par value common stock.On June 30,2019,the accounting records showed the following amounts: 1.Calculate the amounts for common stock and additional paid-in capital. 2.Prepare a balance sheet as of June 30,2019.

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

The current ratio is current assets divided by current liabilities.