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Exam 2: The Balance Sheet

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Question 101

Multiple Choice

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Bolt Enterprises receives $100,000 cash from its customers on account.Bolt uses the cash to pay off $100,000 on a bank loan,the net result is that:

A) assets would increase by $100,000 while liabilities would decrease by $100,000.
B) liabilities would decrease by $100,000 while stockholders' equity would increase by $100,000.
C) assets would decrease by $100,000 and liabilities would decrease by $100,000.
D) liabilities would decrease by $100,000 and stockholders' equity would decrease by $100,000.

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Question 102

Multiple Choice

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What will be the effect on the balance sheet of issuing shares of common stock in exchange for cash?

A) An increase in Retained Earnings
B) A decrease in Common Stock
C) A decrease in Retained Earnings
D) An increase in Common Stock

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Question 103

Multiple Choice

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Assets totaled $24,250 and liabilities totaled $8,500 at the beginning of the year.During the year,assets decreased by $3,500 and liabilities increased by $2,800. What is the amount of the change in stockholders' equity during the year?

Doug's Doodle Shop,specializing in dog supplies,signs a contract with a pet groomer.Next month,the groomer will begin leasing a portion of Doug's store and provide grooming services.The signing of the contract:

Who has first claim to a business's assets should the company go out of business?

For each of the following,indicate how the event would most likely be categorized. -A company uses up supplies to manufacture a product.

The classified balance sheet for a company reported current assets of $811,925,total liabilities of $399,770,Common Stock of $500,000,and Retained Earnings of $65,130.The current ratio was 2.5. What is the total amount of current liabilities?

When a company prepares a classified balance sheet,liability accounts must be shown in subcategories of current and noncurrent.

T-accounts represent a simplified version of the:

Typical cash flows from investing activities include:

The creditors' claims to a company's resources are represented by:

Which of the following statements about transaction analysis is not correct?

The following is a list of account balances for Pick-A-Pet,Inc. ,as of June 30,Year 3: $\begin{array}{lr}\text { Accounts Payable } & \$ 349,200 \\\text { Accounts Receivable } & 419200 \\\text { Cash } & 732600 \\\text { Common Stock } & 662,100 \\\text { Equipment } & 58,400 \\\text { Logo and Trademarks } & 421,600 \\\text { Notes Payable } & 268,900 \\\text { Retained Earnings } & 470,100 \\\text { Software } & 118,500\end{array}$ The company entered into the following transactions during July,Year 3.Stockholders contribute $300,000 cash for additional ownership shares and the company borrows $150,000 in cash from a bank to buy new equipment at a later date.No other transactions took place during July,Year 3. Required: Part a.Prepare a classified balance sheet for the company at June 30,Year 3. Part b.Show the effects of the July transactions on the basic accounting equation. Part c.Prepare the journal entries that would be used to record the transactions.

General Motors (GM)signs a new labor agreement that its workers will receive a 5% wage increase next year.This transaction affects GM's financial statements in the current year.

________ are of special importance because they are the only activities that enter the financial accounting system.

Puffin,Inc.issues $1,000,000 in new stock for cash.Puffin's stockholders' equity does not change because as new shares are sold,the value of its existing shares falls.

What is the effect on the balance sheet if a company purchases $100 of supplies using cash?

Every transaction involves a(n) :

Listed below are components of several transactions.Indicate whether a debit (dr) or credit (cr) would be required to record the component of the transaction. -Decrease in Equipment.

On January 1,Year 3,Wayfarer Co.'s assets were $240,000 and its stockholders' equity was $112,000.During the year,assets increased $12,000 and liabilities decreased $8,000. Required: Determine the amount of stockholders' equity at December 31,Year 3.