Finanicial Exam Handout

Topics: Generally Accepted Accounting Principles, Balance sheet, Liability Pages: 12 (2530 words) Published: December 5, 2012
1. A company received cash in exchange for issuing stock. This transaction: a.increased assets and increased equity
b.increased assets and increased liabilities
c.increased assets and increased revenues
d.increased assets and increased expenses

2. A company purchased office supplies on account. This transaction: a.increased assets and increased equity
b.increased assets and increased liabilities
c.increased assets and increased revenues
d.increased assets and increased expenses

3. A company performed services for a customer on account. This transaction: a.increased assets and decreased equity
b.increased assets and increased liabilities
c.increased assets and increased revenues
d.increased assets and increased expenses

4. A company paid cash for employee wages. This transaction: a.decreased cash and decreased expenses
b.decreased cash and increased liabilities
c.decreased cash and decreased revenues
d.decreased cash and increased expenses

5. A company paid cash for an amount owed to a creditor. This transaction: a.decreased cash and decreased expenses
b.decreased cash and decreased liabilities
c.decreased cash and decreased revenues
d.decreased cash and increased expenses
6. The owner of a business paid cash from his personal checking account to purchase an automobile for his personal use. This transaction: a.decreased cash and increased expenses
b.increased a liability account and increased liabilities c.increased assets and increased owners’ equity
d.is not a transaction recognized by the business

7. Which type of account is increased when a company records a debt? a.expense
b.retained earnings
c.liability
d.asset

8. The payment of an amount owed to a creditor would:
a.increase assets
b.increase liabilities
c.decrease net income
d.decrease liabilities

9. The payment of salaries to employees would:
a.increase assets
b.increase net income
c.increase liabilities
d.decrease stockholders’ equity
10. When a company performs a service and immediately collects the cash from the customer, which of the following would occur? a.net income would increase
b.expenses would decrease
c.assets would decrease
d.stockholders’ equity would decrease

11. Purchasing supplies and paying cash for them would:
a.increase total assets
b.decrease total assets
c.have no effect on total assets
d.increase total liabilities and stockholders’ equity

12. Paying a utility bill would:
a.increase expenses
b.increase liabilities
c.increase owners’ equity
d.decrease revenues

13. Borrowing money from the bank by signing a note payable would: a.increase stockholders’ equity
b.increase net income
c.decrease liabilities
d.have no effect on stockholders’ equity

14. Receiving a payment from a customer on account would:
a.have no effect on stockholders’ equity
b.increase net income
c.increase stockholders’ equity
d.increase liabilities

15. The purchase of land for cash would:
a.increase total assets
b.decrease stockholders’ equity
c.increase the total debits on the trial balance
d.not affect the total of debits or credits on the trial balance

16. An owner investment of a building, valued at $100,000 with an $80,000 outstanding mortgage, into the business would: a.increase assets by $20,000
b.increase assets by $80,000
c.increase stockholders’ equity by $20,000
d.increase stockholders’ equity by $100,000

17. Performing services on account would:
a.increase...
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