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Exam 1: An Introduction to Accounting

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Question 21

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Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions: 1) issued stock for $40,000 2) borrowed $25,000 from its bank 3) provided consulting services for $39,000 cash 4) paid back $15,000 of the bank loan 5) paid rent expense for $9,000 6) purchased equipment for $12,000 cash 7) paid $3,000 dividends to stockholders "8) paid employees' salaries of $21,000 What is Yowell's notes payable balance at the end of Year 1?"

A) $0
B) $25,000
C) ($15,000)
D) $10,000

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

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Question 22

Multiple Choice

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Northern Corporation invested $800 cash in South Company stock. Which of the following describes the effects of this transaction on Northern Corporation's books?

A) Option A
B) Option B
C) Option C
D) Option D

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

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Question 23

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Detailed information about accounts is maintained in the various elements of the financial statements.

Which of the following is not an asset use transaction?

Glavine Company repaid a bank loan with cash. The cash flow from this event should be shown on the horizontal statements model as:

As of December 31, Year 1, Mason Company had $500 cash. During Year 2, Mason earned $1,200 of cash revenue and paid $800 of cash expenses. The amount of cash shown on the balance sheet at the end of Year 2 would be:

Which of the following could describe the effects of an asset exchange transaction on a company's financial statements?

Which of the following financial statements provides information about a company as of a specific point in time?

The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?; Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500. Based on this information, the amount of expenses on Calloway's income statement was:

Chico Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Chico's statements?

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1. Acquired $6,000 cash from issuing common stock. 2) Borrowed $4,400 from a bank. 3) Earned $6,200 of revenues. 4) Incurred $4,800 in expenses. 5) Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: 1) Acquired an additional $1,000 cash from the issue of common stock. 2) Repaid $2,600 of its debt to the bank. 3) Earned revenues, $9,000. 4) Incurred expenses of $5,500. 5) Paid dividends of $1,280. The net cash flow from financing activities on Lexington's Year 2 statement of cash flows was

If Ballard Company reported assets of $500 and liabilities of $200, Ballard's stockholders' equity equals:

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues cash. 4) Paid expenses of $250. "5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) " 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750 cash. 4) Incurred expenses of $360. "5) Paid dividends of $100. The net cash inflow from operating activities on Packard's statement of cash flows for Year 2 is:"

Which of the following items appears in the investing activities section of the statement of cash flows?

Indicate whether each of the following statements about equity is true or false. _______ a) Operating expenses reported on the income statement decrease retained earnings. _______ b) Owners' equity and liabilities can be viewed either as sources of assets or claims to assets of the business. _______ c) Retained earnings is increased by loans received from a bank. _______ d) Dividends paid to stockholders decrease common stock. _______ e) Owners' equity is the residual interest in the company resulting from the difference between assets and liabilities.

On January 1, Year 2, Chavez Company had beginning balances as follows: During Year 2, Chavez paid dividends to its stockholders of $2,000. Given that ending retained earnings was $6,000, what was Chavez's net income for the Year 2?

In which section of a statement of cash flows would the payment of cash dividends be reported?

The four financial statements prepared by a business bear no relationship to each other.

Reynolds Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Reynolds' statements?

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.) 1) Acquired $950 cash from the issue of common stock. 2) Borrowed $420 from a bank. 3) Earned $650 of revenues cash. 4) Paid expenses of $250. "5) Paid a $50 dividend. During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) " 1) Issued an additional $325 of common stock. 2) Repaid $220 of its debt to the bank. 3) Earned revenues of $750 cash. 4) Incurred expenses of $360. "5) Paid dividends of $100. Total assets on Packard's balance sheet at the end of Year 2 will equal:"