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Exam 1: An Introduction to Accounting

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Question 21

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Jacks Company had a net increase in cash from operating activities of $8,000 and a net decrease in cash from financing activities of $1,000. If the beginning and ending cash balances for the company were $3,000 and $11,000, then net cash change from investing activities was:

A) an outflow or decrease of $1,000.
B) an inflow or increase of $2,000.
C) an inflow or increase of $1,000.
D) zero.

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

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Question 22

Multiple Choice

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A company mistakenly recorded a cash purchase of land as an expense. As a result of this error

A) Assets were understated and equity was overstated.
B) Assets and equity were understated.
C) Assets and equity were overstated.
D) Assets were overstated and equity was understateD.If the transaction had been recorded correctly, one asset (land) would have increased and another asset (cash) would have decreased, causing no net change in total assets. As the transaction was recorded, the asset cash decreased and the expense caused equity to decrease as well. Therefore, assets and equity were understated.

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

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Question 23

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An asset exchange transaction does not affect the total amount of claims to a company's assets.

Indicate how each of the following transactions affect assets by entering + for increase, - for decrease, or NA if total assets are not affected. _______ 1) Issued stock to investors. _______ 2) Borrowed cash from the bank. _______ 3) Provided services for cash. _______ 4) Purchased land for cash. _______ 5) Paid operating expenses. _______ 6) Paid cash dividend to the stockholders. _______ 7) Repaid the bank loan.

The amount of total assets on La Paz's 2012 balance sheet was

Which of the following groups has the primary responsibility for establishing generally accepted accounting principles for business entities in the United States?

Rodriguez Co. borrowed $20,000 cash from Century Bank.

Petras Company's net cash inflow from operating activities for 2012 is

Which of the following describes the effects of an asset use transaction on a company's financial statements?

The net cash inflow from financing activities on Petras's 2013 statement of cash flows is

The following events are for Leisure Travel Services for the year 2013, the first year of operations. Assume that all transactions involve the receipt or payment of cash. 1) The business acquired $40,000 from stock issued to owners. 2) Creditors loaned the company $17,500. 3) The company provided services to its customers and received $55,400. 4) The company paid expenses amounting to $43,250. 5) The company purchased land for $29,000. 6) The company paid a dividend of $5,000 to its owners. Required: a) Show the effects of the above transactions on the accounting equation (use appropriate element and account headings). For those events that affect retained earnings, indicate in a separate column the appropriate temporary account. b) Prepare an income statement and balance sheet for the year 2013.

Callahan Company earned $1,500 of cash revenue, paid $1,000 for cash expenses, and paid a $200 cash dividend to its owners. Which of the following statements is true?

Borrowing cash from the bank is an example of which type of transaction?

Name and briefly describe each of the four financial statements.

How does the payment of cash dividends to stockholders affect the accounting equation? Is it considered an asset source, asset use, or asset exchange transaction?

Which of the following is NOT an asset use transaction?

During 2013, Saranac Company earned $12,000 of cash revenue and paid $8,200 of cash expenses and $600 in dividends to the company's owners. Enter each of these three events into the horizontal financial statements model, below. Indicate dollar amounts of increases and decreases. For cash flows, show whether they are operating activities (OA), investing activities (IA), or financing activities (FA).

How does providing services for cash affect the accounting equation? Is it considered an asset source, asset use, or asset exchange transaction?

What does a company's statement of cash flow tell you about the company?

Patterson Co. paid $50,000 cash to purchase land.