2.3 Learning Objective 2-3
1) If a company declares and pays a dividend to its stockholders, both cash and expenses will decrease.
2) Generally companies will prepare financial statements:
A) after every transaction.
B) only when both the balance sheet and income statement are affected.
C) at the end of the accounting period.
D) at the close of every business day.
3) When services are performed on account:
A) cash is increased.
B) revenue will not be recorded until the cash is received from the customer.
C) accounts receivable is increased.
D) accounts payable is increased.
4) A company received cash in exchange for issuing stock. This transaction increased assets and:
A) increased expenses.
B) increased revenues.
C) increased liabilities.
D) increased stockholders' equity.
5) When a business purchases land with a note payable:
A) both assets and stockholders' equity are increased.
B) assets are decreased and stockholder's equity is increased.
C) both assets and liabilities are increased.
D) assets are increased and liabilities are decreased.
6) The debt created by a business when it makes a purchase of inventory on account is a(n):
A) revenue.
B) account receivable.
C) note payable.
D) account payable.
7) Which of the following transactions will increase Stockholders' Equity?
A) The company pays a dividend to its shareholders.
B) The company issues common stock to new shareholders.
C) The company purchases equipment.
D) The company makes a payment on account.
8) Which of the following transactions will increase one asset and decrease another asset?
A) The purchase of office supplies on account.
B) The performance of services on account.
C) The purchase of equipment for cash.
D) The performance of services for cash.
9) A company performed services for a customer for cash. This transaction increased assets and:
A) decreased stockholders' equity.
B) increased liabilities.
C) increased expenses.
D) increased revenues.
10) A company receives an utility bill and immediately pays it. With this transaction:
A) stockholders' equity is decreased.
B) expenses are decreased.
C) assets are increased.
D) liabilities are increased.