Question

On December 1st a company pays $1,380 to a catering company for the company Christmas party scheduled for mid December 2015. In recording this transaction the December 31st financial statements would reflect:

a decrease to assets and a decrease to shareholders' equity.

a decrease to liabilities and a decrease to shareholders' equity.

a decrease to liabilities and an increase to shareholders' equity.

a decrease to assets and an increase to shareholders' equity.

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Question 21 pts

Which of the following is a current asset?

Land

Prepaid rent

Accounts payable

Two of the other answers are correct

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Question 31 pts

The net income from the bottom of the statement of income is connected to the statement of financial position (balance sheet) through which of the following accounts?

Retained earnings

Total assets

None of the other answers is correct. There is no connection between a company's statement of income and statement of financial position.

Share capital

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Question 41 pts

Which of the following is an operating activity for a department store?

All of the other answers are correct - all are operating activities.

Paying wages to store employees.

Paying for newspaper advertisements to publicise a 'Back to School' sale.

Selling goods to customers.

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Question 51 pts

If a company is at the end of its first year of operations, which of the following is/are true?

Retained earnings = Net income - Dividends declared

Assets - Liabilities = Shareholders' Equity

Assets = Liabilities + Shareholders' Equity

All of the other answers are correct.

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Question 61 pts

A public company issues a share to Investor A in exchange for cash of $10. One year later the company's shares are trading on the stock exchange at a market price of $15 per share. Which of the following statements is true?

Investor A has an overall increase in wealth of $15.

Investor A has an overall increase in wealth of $5.

Both the company and Investor A have an overall increase in wealth of $5.

The company has an overall increase in wealth of $15.

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Question 71 pts

The two primary sources of funds to finance a company's expansion are:

Creditors and investors.

Customers and shareholders.

Investors and shareholders.

Customers and creditors.

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Question 81 pts

A company collects cash from a customer that had purchased goods on account three months earlier. In recording the cash collection there would be

a decrease to Assets (Accounts receivable) and an increase to Shareholders' Equity (Sales revenue).

an increase to Assets (Cash) and a decrease to Shareholders' Equity (Sales revenue).

an increase to Assets (Cash) and a decrease to Assets (Accounts receivable).

an increase to Assets (Cash) and an increase to Assets (Accounts receivable).

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Question 91 pts

Which of the following best describes an asset?

An economic sacrifice made to earn revenue.

An investment that owners have made in the business.

Something that has been purchased and paid for by an entity.

An economic resource that provides future benefit.

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Question 101 pts

Material information is information that would impact the decision of a financial statement user. Materiality is most closely related to:

Faithful representation

Relevance

Understandability

Verifiability

Answer 1

1. Option A. A decrease in assets and A decrease in Stock holders' equity. as it is an outflow of resources

2. Option B. Land is a non current asset and accounts payable is a current liability and Prepaid rent is current asset

3. Option A. Net income is added to Retained earnings as a part of Stock holders' equity

4. Option A. All activities are core operating activities of departmetal store

5. Option D. All are correct formulas

6. Option B. Investor invested $10 and it increased to $15 thereby incrementing wealth of $5

7. Option C. With respect to Company's expansion, Investors and sharholders' play a major role

8. Option C. Journal Entry is Cash A/c Dr To Accounts receivable

9. Option D. it is an economic resource which provide future benefit to the organisation

10. Option A. Faithful representation is the concept which provides information relating to conduct of business with respect to exact happening in the business. For example, if a company reports in its balance sheet that it had $1,200,000 asset, Then the asset and amount are there in the business