ACC 300 CHAPTER 2 EXAM QUESTIONS WITH
VERIFIED SOLUTIONS
True or false: An internal event involves an exchange between the company and a separate
economic entity.
False
An internal event (Select all that apply)
-does not affect the company's financial position.
-involves an exchange transaction with another entity.
-affects the company's financial position.
-does not involve an exchange transaction with another entity.
-affects the companies financial position
-does not involve an exchange transaction with another entity
Which of the following represents the accounting equation?
-Owners' Equity - Liabilities = Assets
-Assets = Liabilities - Owners' Equity
-Assets + Liabilities = Owners' Equity
-Assets = Liabilities + Owners' Equ
Assets=Liabilities+Owner's Equity
A transaction is an event that
-has a dual effect on the accounting equation
-has a single effect on the accounting equation
-increases or decreases total assets
-increases or decreases income
has a dual effect on the accounting equation
Galaxy Corporation issues 500 shares of $1 par value common stock for $5,000. What is the
total effect on owners' equity?
-No Effect
-Increases $500
-Increases $4,500
-Increases $5,000
Increases $5,000
Which of the following are external events? (Select all that apply.)
-Collecting on a customer account.
-Borrowing from the bank.
, -Using supplies purchased in the previous month.
-Paying employee salaries
-Collecting on a customer account
-Borrowing from the bank
-Paying employee salaries
Purchasing supplies on account _________ the supplies account and ________ accounts
payable.
-decreases; increases
-increases; decreases
-increases; increases
-decreases; decreases
increases; increases
Which of the following is an internal economic event?
-Collecting on accounts receivable
-Issuing stock
-Depreciating equipment
-Borrowing from a bank
Depreciating equipment
Hargrave Professional Group performs legal services on account. What is the effect of this
transaction on the balance sheet equation for Hargrave?
-Increase assets
-Decrease liabilities
-Decrease owners' equity
Increase Assets
Londa Corporation pays employees $3,000 for the month. What is the effect on the balance
sheet equation? (Select all that apply.)
-decrease owners' equity
-decrease assets
-increase owners' equity
-decrease liabilities
-increase assets
-increase liabilities
-decrease owner's equity
-decrease assets
VERIFIED SOLUTIONS
True or false: An internal event involves an exchange between the company and a separate
economic entity.
False
An internal event (Select all that apply)
-does not affect the company's financial position.
-involves an exchange transaction with another entity.
-affects the company's financial position.
-does not involve an exchange transaction with another entity.
-affects the companies financial position
-does not involve an exchange transaction with another entity
Which of the following represents the accounting equation?
-Owners' Equity - Liabilities = Assets
-Assets = Liabilities - Owners' Equity
-Assets + Liabilities = Owners' Equity
-Assets = Liabilities + Owners' Equ
Assets=Liabilities+Owner's Equity
A transaction is an event that
-has a dual effect on the accounting equation
-has a single effect on the accounting equation
-increases or decreases total assets
-increases or decreases income
has a dual effect on the accounting equation
Galaxy Corporation issues 500 shares of $1 par value common stock for $5,000. What is the
total effect on owners' equity?
-No Effect
-Increases $500
-Increases $4,500
-Increases $5,000
Increases $5,000
Which of the following are external events? (Select all that apply.)
-Collecting on a customer account.
-Borrowing from the bank.
, -Using supplies purchased in the previous month.
-Paying employee salaries
-Collecting on a customer account
-Borrowing from the bank
-Paying employee salaries
Purchasing supplies on account _________ the supplies account and ________ accounts
payable.
-decreases; increases
-increases; decreases
-increases; increases
-decreases; decreases
increases; increases
Which of the following is an internal economic event?
-Collecting on accounts receivable
-Issuing stock
-Depreciating equipment
-Borrowing from a bank
Depreciating equipment
Hargrave Professional Group performs legal services on account. What is the effect of this
transaction on the balance sheet equation for Hargrave?
-Increase assets
-Decrease liabilities
-Decrease owners' equity
Increase Assets
Londa Corporation pays employees $3,000 for the month. What is the effect on the balance
sheet equation? (Select all that apply.)
-decrease owners' equity
-decrease assets
-increase owners' equity
-decrease liabilities
-increase assets
-increase liabilities
-decrease owner's equity
-decrease assets
