FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Investing and Financing Decisions and the Accounting System

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

The primary objective of financial reporting is to provide useful information to external decision makers.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Which of the following would result when a company sells additional shares of common stock for cash?

A) A noncurrent liability and a financing cash flow are created.
B) Common stock increases and a financing cash flow results.
C) A noncurrent liability and an investing cash flow are created.
D) Common stock increases and an investing cash flow results.

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 3

Essay

Review LaterAdd Note

On January 1, 2014, Dr. Beth Hill started a new professional corporation, Beth Hill, P.C., to practice medicine with an initial investment of $100,000 in exchange for 20,000 shares of $2 par value common stock. On June 30, 2014, the accounting records showed the following amounts: $\begin{array} { | l | r | } \hline \text { Accounts Payable } & \$ 2,000 \\\hline \text { Accounts Receivable } & \$ 6,200 \\\hline \text { Cash } & \$ 48,100 \\\hline \text { Common stock } & \$ ? \\\hline \text { Additional paid-in capital } & \$ ? \\\hline \text { Office Equipment } & \$ 60,000 \\\hline \text { Office Supplies } & \$ 3,500 \\\hline \text { Retained Earnings } & \$ 5,800 \\\hline \text { Notes Payable } & \$ 10,000 \\\hline\end{array}$ Requirement: 1. Calculate the amounts for common stock and additional paid-in capital. 2. Prepare a balance sheet as of June 30, 2014.

Which of the following liability accounts does not usually require a future cash payment?

Describe both the investing activities and financing activities section of the statement of cash flows. Provide some examples of each activity.

Selling stock to investors for cash would result in which of the following?

The Pioneer Company has provided the following account balances: Cash $38,000; Short-term investments $4,000; Accounts receivable $48,000; Supplies $6,000; Long-term notes receivable $2,000; Equipment $96,000; Factory Building $180,000; Intangible assets $6,000; Accounts payable $30,000; Accrued liabilities payable $4,000; Short-term notes payable $14,000; Long-term notes payable $92,000; Common stock $180,000; Retained earnings $60,000. What are Pioneer's total current liabilities?

Financial reporting focuses on reporting the impact of transactions on an entity's financial position.

Centex, Inc. issued 50,000 shares of its $1 par value common stock for $20 per share. The journal entry to record the stock issue would include which of the following?

Which of the following journal entries is correct when a business entity pays cash for advertising to be used next year? A. Cash $\quad$ Advertising expense B. Advertising expense $\quad$ Cash C. Cash $\quad$ Prepaid advertising expense D. Prepaid advertising expense $\quad$ Cash

For each of the transactions listed below, indicate whether it is an investing (I) or financing (F) activity on the statement of cash flows. Also, indicate if the transaction increases (+) or decreases (-) cash. $\begin{array} { | l | l | l | l | } \hline { \text { Transaction } } && \text { Type of Activity } & \text { Effect on Cash } \\\hline \text { Ex. } & \text { Paid dividends to the owners } & \text { F } & - \\\hline \text { A. } & \begin{array} { l } \text { Purchased equipment to use in the } \\\text { business. }\end{array} & & \\\hline \text { B. } & \text { Issued stock for cash. } & & \\\hline \text { C. } & \text { Borrowed money at the bank. } & & \\\hline \text { D. } & \begin{array} { l } \text { Sold a piece of land adjacent to the } \\\text { plant. }\end{array} & & \\\hline \text { E. } & \begin{array} { l } \text { Paid the principal balance of a note } \\\text { payable. }\end{array} & & \\\hline\end{array}$

The trial balance is similar to the balance sheet in that it is a listing of assets, liabilities, and stockholders' equity and is provided to external decision makers.

Complete the following schedule for Blue Eye Company.

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

A company with a high current ratio should never have liquidity problems.

For accounting information to be useful, it must be which of the following?

Which of the following would cause a decrease in cash from investing activities?

An objective of preparing the trial balance is to test the equality of debits and credits.

The trial balance is a listing of account balances that are found in the general ledger.

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000. The additional paid-in capital account balance increased $2,500 during the year. The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000. Net income was $26,000. How much did Superior sell its common stock for during the year?