Question

1.Rush Corporation borrowed $25,000 from the bank. Which of the following accurately shows the effects of the transaction? a. Decrease cash $25,000 and decrease notes payable $25,000 b. Increase cash $25,000 and decrease notes payable $25,000 c. Increase cash $25,000 and increase notes payable $25,000 d. Decrease cash $25,000 and increase notes payable $25,000

2. Yuan Corporation purchased office equipment on account. What is the effect of this transaction? a. Cash will decrease and office equipment will increase. b. Total assets and total liabilities will increase. c. Cash flow from financing activities will decrease. d. Total assets will increase and shareholders' equity will decrease.

3.The basic elements of a financial accounting system include a framework for preparing financial statements. True /False

4.Receiving cash in advance of performing a service creates a liability for the company. True/ False.

5.The accrual basis recognizes liabilities at the time the business incurs the obligation to pay for the services or goods purchased. True False.

6.Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transaction have on the accounts under the accrual basis of accounting? a. Net increase in assets of $35,000 and a net increase in liabilities of $35,000 b. Net increase in assets of $75,000 and a net decrease in liabilities of $30,000 c. Net increase in assets and liabilities of $55,000 d. Net increase in assets of $55,000 and a net decrease in liabilities of $35,000

7.The unearned rent account has a balance of $60,000. If $4,000 of the $60,000 is unearned at the end of the accounting period, the amount of the adjusting entry is: a. $64,000. b. $56,000. c. $4,000. d. $60,000.

8. The unearned rent account has a balance of $57,893. If $6,579 of the $57,893 is unearned at the end of the accounting period, find the amount of the adjusting entry. Select the correct answer. a. $64,472 b. $6,579 c. $51,314 d. $57,893

9.Which of the following statements is true? a. The revenue activities of a retail business involve providing services to customers. b. The revenue activities of a service business involve providing services to customers. c. The revenue activities of a service business involve the building of a product. d. The revenue activities of a retail business involve the building of a product.

10.The cost of goods sold is subtracted from sales to arrive at _____. a. net sales b. gross profit c. operating income d. Fees earned

11.Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n): a. increase in Sales. b. decrease in Sales. c. increase in Merchandise Inventory. d. decrease in Merchandise Inventory.

12.Merchandise purchased on account by a company has no effect on its working capital because: a. inventory and accounts payable are increased by the same amount. b. cash and inventory are increased by the same amount. c. cash and inventory are decreased by the same amount. d. inventory and accounts receivable are increased by the same amount.

13.Sales to customers who use bank credit cards such as MasterCard and Visa are usually recorded by a(n): a. increase in Cash, decrease in Credit Card Expense, and increase in Sales. b. decrease in Sales, increase in Credit Card Expense, and decrease in Cash. c. increase in Cash, increase in Credit Card Expense, and increase in Sales. d. decrease in Bank Credit Card Sales, increase in Credit Card Expense, and increase in Sales.

14.If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as: a. FOB buyer. b. FOB shipping point. c. FOB n/30. d. FOB destination.

15.If title to merchandise purchases passes to the buyer when the goods are delivered to the buyer, the terms are: a. n/30. b. FOB shipping point. c. consigned. d. FOB destination.

16..Based on the given information, calculate the net cash flow from operating activities using the indirect method. During the previous year, Skyrim Co. reported a net income of $136,500. Its depreciation expense was $38,000 and its accounts payable balance decreased by $29,250. a. $98,500 b. $203,750 c. $145,250 d. $174,500

Answer 1

1. c. Increase cash $25,000 and increase notes payable $25,000

2. b. Total assets and total liabilities will increase.

3. True

4. True

5. True

6. a. Net increase in assets of $35,000 and a net increase in liabilities of $35,000

7.  b. $56,000

8. c. $51,314

9. b. The revenue activities of a service business involve providing services to customers.

10.  b. gross profit

11. c. increase in Merchandise Inventory.

12. a. inventory and accounts payable are increased by the same amount.

13. increase in Cash, increase in Sales.

14.  b. FOB shipping point

15.  b. FOB shipping point

16.  d. $174,500