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Homework answers / question archive / University of Alabama ACC 506 Chapter 2 Quiz 1)Which of the following is an asset source transaction? a
University of Alabama
ACC 506
Chapter 2 Quiz
1)Which of the following is an asset source transaction?
a. Received a payment on accounts receivable
b. Paid a cash dividend to stockholders
c. Accrued salary expense d. Issued common stock
2. The recognition of an expense may be accompanied by which of the following?
a. A decrease in liabilities b. An increase in liabilities
c. An increase in assets
d. A decrease in revenue
3. Which of the following is a claims exchange transaction?
a. Recognized revenue earned on a contract where the cash had been collected at an earlier date
b. Issued common stock
c. Purchased machine for cash
d. Invested cash in an interest earning account
4. How would purchasing prepaid rent be classified? a. Asset exchange transaction
b. Claims exchange transaction
c. Asset source transaction
d. Asset use transaction
5. How will accounts receivable appear on the following financial statements?
a. Revenue on the income statement
b. Expense on the income statement c. Asset on the balance sheet
d. Liability on the balance sheet
6. Recognition of revenue may be accompanied by which of the following?
a. A decrease in a liability
b. An increase in an asset
c. An increase in a liability
d. An increase in an asset or a decrease in a liability
7. Paying cash to settle a salaries payable obligation will affect which section of the statement of cash flows?
a. Financing activities b. Operating activities
c. Investing activities
d. Noncash activities
8. Which of the following statements about the balance sheet in a revenue account at the beginning of an accounting period is true?
a. The beginning balance of a revenue account will always be higher than the previous periods ending balance
b. The beginning balance of a revenue account equals last period’s ending balance
c. The beginning balance of a revenue account will equal to the amount of retained earnings for the previous period
9. Which of the following accounts would not appear on a balance sheet? a. Service Revenue
b. Salaries Payable
c. Neither service revenue nor unearned revenue would appear on the balance sheet
d. Unearned Revenue
10. Greg Company recognized revenue on account. Which of the following financial statements are affected by this accounting event?
a. Statement of cash flows
b. Income statement and the balance sheet
c. Balance sheet
d. Income statement
11. In Year 1, Dale Company incurred $4,000 of utility expense on account. Dale paid cash for these expenses in Year 2. Which of the following shows how paying cash for utility expense will affect Dale’s accounting equation in Year 2?
a. Option D
b. Option C
c. Option B
d. Option A
12. What happens when a company collects cash from accounts receivable?
a. Liabilities decrease
b. Total assets are not affected
c. The asset accounts receivable increases
d. Stockholders’ equity increases
13. Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) the amount of net cash flow for operating activities on the statement of cash flows?
a. Paid advertising expense
b. Paid dividends to stockholders c. Purchased supplies for cash
d. Purchased land for cash
14. The following pre-closing accounts and balances were drawn from the records of Carolina Company on December 31, Year 2:
Cash $ 3,800 Accounts receivable $ 1,550
Dividends 1,900 Common stock 2,375
Land 2,200 Revenue 2,200
Accounts payable 1,150 Expense 1,250
What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2?
a. $6,000
b. $4,975
c. $4,025
d. $3,075
15. Which of the following shows how the year-end adjustment to recognize supplies expense will affect a company’s financial statements?
a. Option C
b. Option D
c. Option B
d. Option A
16. During Year 1 China Enterprises experienced the following events:
(1) Earned $10,000 of revenue on account
(2) Incurred $9,000 of expenses on account
Based on this information, which of the following describes the combined effects of both events on the amounts of total assets, net income, and cash flows from operating activities shown on the Year 1 financial statements?
a. Option B
b. Option A
c. Option D
d. Option C
17. Bledsoe Company received $21,000 cash from the issue of stock on January 1, Year
1. During Year 1, Bledsoe earned $9,100 of revenue on account. The company collected
$7,200 cash from accounts receivable and paid $6,000 cash for operating expenses. Based on this information alone, during Year 1, which of the following statements is true?
a. Total assets increased by $1,200
b. Total assets did not change
c. Total assets increased by $31,300 d. Total assets increased by $24,100
18. If retained earnings decreased during the year, and no dividends were paid, which of the following must be true?
a. Expenses for the year exceeded revenues
b. Total stockholders’ equity increased
c. The company did not have enough cash to pay its expenses
d. Liabilities increased during the year
19. Nelson Company experienced the following transactions during Year 1, its first year of operation.
Issued $7,800 of common stock to stockholders Provided $4,100 of services on account
Paid $2,050 cash for operating expenses Collected $2,800 of cash from accounts receivable Paid a $190 cash dividend to stockholders
What is the net income that will be reported for Year 1?
a. $2,050
b. $1,300
c. $1,490
d. $1,860
20. Revenue on account amounted to $6,000. Cash collections of accounts receivable amounted to $3,800. Expenses for the period were $3,100. The company paid dividends of $950. What was the amount of net income for the period?
a. $1,950
b. $2,850
c. $700
d. $2,900
