2.1 Learning Objective 2-1
1) A transaction is any event that has a financial impact on the business and that can be measured reliably.
2) Which of the following is NOT a business transaction?
A) A company buys goods on account.
B) A company sells land for cash.
C) A company fired 10 percent of the employees due to lackluster sales.
D) A company borrows money from the bank.
2.2 Learning Objective 2-2
1) The account is the basic summary device used in accounting.
2) An accounts receivable usually specifies an interest rate.
3) Assets include cash, land, and accounts payable.
4) Prepaid expenses are an asset.
5) A record of all the changes in a particular asset during a period of time is found in a(n):
A) transaction.
B) trial balance.
C) prior period's balance sheet.
D) account.
6) All of the following accounts would be considered assets EXCEPT for:
A) Cash.
B) Retained Earnings.
C) Prepaid Expenses.
D) Notes Receivable.
7) Which account includes bank account balances in multiple checking accounts?
A) Accounts Receivable
B) Notes Receivable
C) Cash
D) Prepaid Expenses
8) Which of the following is a CORRECT statement?
A) Shareholders' equity is also called Proprietorship Equity.
B) A proprietorship has more than one capital account.
C) A partnership has a separate owner's equity account for each partner.
D) Retained earnings is the owner's investment in the corporation.
9) Notes payable, accounts payable, taxes payable and salaries payable are all examples of:
A) liabilities.
B) revenues.
C) expenses.
D) assets.
10) Which transaction increases stockholders' equity?
A) sale of common stock
B) declared dividends
C) Total expenses for the period exceed total revenues for the period.
D) payment of operating expenses
11) Which transaction decreases stockholders' equity?
A) sale of common stock
B) purchase of equipment with cash
C) Total revenues for the period exceed total expenses for the period.
D) Total expenses for the period exceed total revenues for the period.
12) Which transaction decreases stockholders' equity?
A) purchase inventory on account
B) provided services on account
C) provided services and received cash from the customer immediately
D) Employees worked one week and were paid at the end of the week.