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What is the total amount of current liabilities?


A) $649,540
B) $4,059,625
C) $771,920
D) $799,540

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

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Your company pays back $2 million on a loan it had received earlier from a bank.


A) Assets decrease by $2 million,liabilities and stockholders' equity are both unchanged.
B) Assets decrease by $2 million,liabilities decrease by $2 million,stockholders' equity is unchanged.
C) Assets decrease by $2 million and liabilities increase by $2 million.
D) Assets decrease by $2 million,liabilities are unchanged,stockholders' equity decreases by $2 million.

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

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Which of the following statements regarding the balance sheet is true?


A) A "classified" balance sheet is one that contains privileged information.
B) All liabilities require that the company sacrifice resources at some time in the future.
C) All companies use an identical list of account names defined by the Financial Accounting Standards Board (FASB) .
D) A balance sheet is prepared for a period of time.

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

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The E.Flynn Company started business by obtaining financing through debt financing and equity financing.Which of the following statements is FALSE?


A) Equity financing refers to the money obtained through owners' contributions and reinvestments of profit.
B) Debt financing refers to the money obtained through loans.
C) The business is obligated to repay debt financing.
D) The business is obligated to repay equity financing.

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

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Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago,and which would probably now sell for $80,000?


A) The cost principle
B) Conservatism
C) The separate entity concept
D) The monetary concept

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

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A company entered into the following transaction: Purchased equipment for use in the business at a cost of $12,000,one-fourth was paid in cash and the company signed a note for the balance.Choose the TRUE statement about the journal entry to record this transaction.


A) The journal entry will include a debit to Notes Payable of $9,000.
B) The journal entry will include a debit to Cash of $12,000.
C) The journal entry will include a credit to Notes Payable of $9,000.
D) The journal entry will include a debit to Equipment of $3,000.

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

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The local branch of the Universal Bank System (UBS) receives money from depositors and lends it to borrowers.Which of the following would be true about UBS's financial statements?


A) UBS reports deposits as assets and loans as liabilities.
B) UBS reports both deposits and loans as assets.
C) UBS reports deposits as liabilities and loans as assets.
D) UBS reports both deposits and loans as liabilities.

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

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Choose the TRUE statement.


A) All asset accounts have a normal debit balance with the exception of cash which has a normal credit balance.
B) The Contributed Capital account is increased by debits.
C) When payment is made on a liability such as accounts payable,the liability account is decreased with a debit.
D) The total amount of debits to asset accounts must equal the total amount of credits to liability and stockholders' equity accounts.

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

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For each of the following,indicate how the line item would be categorized on a classified balance sheet. CA (current asset) LTA (long-term asset) CL (current liability) LTL (long-term liability) SE (stockholders' equity) ____ Property and Equipment ____ Contributed Capital ____ Supplies ____ Retained Earnings ____ Accounts Receivable ____ Accounts Payable

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The MegaBuck movie studio's name has become famous for adventure movies.Another studio once offered to buy the name for $20 million,but MegaBuck turned down the offer.The MegaBuck balance sheet will show:


A) Other Assets,valued at $20 million.
B) Other Assets,valued conservatively at $10 million.
C) Accounts Receivable,valued at $20 million.
D) The company's name will not be shown as an asset on the balance sheet.

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

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What is the amount of total liabilities?


A) $6,000
B) $15,600
C) $16,000
D) $5,600

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

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Park & Company was recently formed with a $5,000 investment in the company by stockholders.The company then borrowed $2,000 from a local bank,purchased $1,000 of supplies on account,and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance.Based on these transactions,the company's total assets are:


A) $7,000.
B) $9,000.
C) $10,000.
D) $11,000.

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

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If a company borrows money from a bank and signs an agreement to repay the loan several years from now,in which account would the company report the amount borrowed?


A) Contributed Capital
B) Accounts Payable
C) Notes Payable
D) Retained Earnings

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

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Your company orders and broadcasts a 30 second ad during the Super Bowl for $1.2 million.It is legally obligated to pay for the ad but has not yet done so.


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

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

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The standard formatting for a journal entry lists the dollar amounts for:


A) credits underneath and to the right of the dollar amounts for debits.
B) debits and credits aligned equally to the right.
C) debits underneath and to the right of the dollar amounts for credits.
D) debits and credits aligned equally to the left.

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

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Which of the following is an accurate description of the economic events involving Accounts Receivable as documented in the T-account above?


A) Customers added more to their account balances than they paid off.
B) Customers paid off more than they added to their account balances.
C) The company paid off its debt more than it incurred new debt.
D) The company incurred more debt than it paid off.

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

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On January 1,Kirk Corporation had total assets of $850,000.During the month the following activities occurred: - Kirk Corporation acquired equipment costing $6,000,promising to pay cash for it in 60 days. - Kirk Corporation purchased $3,500 of supplies for cash. - Kirk Corporation sold land which it had acquired 2 years ago.The land had cost $15,000 and it was sold for $15,000 cash. - Kirk Corporation signed an agreement to rent additional storage space next month at a charge of $1,000 per month. - The financial vice president of Kirk Corporation purchased a new vehicle for cash of $35,000. What is the amount of total assets of Kirk Corporation at the end of the month?


A) $859,500
B) $856,000
C) $821,000
D) $806,000

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

Correct Answer

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In a T-account,debits appear in what manner?


A) They are on the left under assets but on the right under liabilities and stockholders' equity.
B) They are always listed on the right.
C) They are always listed on the left.
D) They are on the right under assets but on the left under liabilities and stockholders' equity.

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

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Which of the following would not be recorded as an identifiable accounting transaction?


A) Putting a deposit down on a new vehicle.
B) Hiring a new employee.
C) Obtaining a bank loan.
D) Receiving a deposit from a customer.

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

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The Sweet Smell of Success Fragrance Company borrowed $60,000 from the bank and used all of the money to redesign its new store.Sweet Smell's balance sheet would show this as:


A) $60,000 under Furnishings and Equipment and $60,000 under Notes Payable.
B) $60,000 under Supplies and $60,000 under Notes Payable.
C) $60,000 under Furnishings and Equipment and $60,000 under Accounts Payable.
D) $60,000 under Other Assets and $60,000 under Other Liabilities.

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

Correct Answer

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