CBAD 201 FINAL EXAMINATION PAPER
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
⩥ In 1990, Johnson Company purchased a building for $200,000. In
2022, a real estate professional says the building has a fair value of
$1,900,000. In 2022, a similar building down the street recently sold for
$900,000. What value, before consideration of accumulated
depreciation, is reported for the building on the balance sheet at
December 31, 2022? Answer: $200,000
⩥ The principle stating that assets acquired by the business should be
recorded at their actual cost on the date of purchase is: Answer:
historical cost.
⩥ The assets of a company: Answer: resources that are expected to
produce a future benefit.
⩥ Receivables are classified as: Answer: assets
⩥ Net income is computed as: Answer: revenues − expenses.
⩥ At the end of the current accounting period, account balances were as
follows: Cash, $28,000; Accounts Receivable, $40,000; Common Stock,
,$19,000; Retained Earnings, $12,000. Liabilities at the end of the period
were: Answer: $37,000.
⩥ Jonathan is a patent attorney and is starting a legal practice. What
form of business organization limits his liability to the amount he has
invested in the business? Answer: Corporation
⩥ Revenues were $144,000, expenses were $140,000, and cash
dividends declared and paid were $2,000. What were the net income and
the change in retained earnings for the period? Answer: Net income was
$4,000; the change in retained earnings was $2,000.
⩥ Which financial statement answers the following question: How well
did the company perform during the year? Answer: income statement
⩥ The portion of net income that the company has kept over a period of
years and not used for dividends is called: Answer: retained earnings.
⩥ The balance sheet reports information about: Answer: assets,
liabilities, and equity.
⩥ Which financial statement must be prepared before the others?
Answer: income statement
, ⩥ The ending balance of Retained Earnings is reported on the: Answer:
Balance Sheet & Statement of Retained Earnings.
⩥ As a practical matter, most companies prepare financial statements:
Answer: at the end of the accounting period.
⩥ When services are performed on account: Answer: accounts
receivable is increased.
⩥ The debt created by a business when it makes a purchase of inventory
on account is a(n): Answer: account payable.
⩥ When a company borrows money (cash) from the bank, which type of
account(s) is(are) increased? Answer: both asset and liability accounts
⩥ The left side of a T−account is always the: Answer: debit side.
⩥ Wetzel Company has the following accounts and balances at the end
of the first year of operations:
Long−Term Notes Payable $150,000
Accounts Receivable $31,000
Accounts Payable $38,000 Building $55,000 Cash and Cash Equivalents
$60,000 Salaries Expense
$20,500 Common Stock
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
⩥ In 1990, Johnson Company purchased a building for $200,000. In
2022, a real estate professional says the building has a fair value of
$1,900,000. In 2022, a similar building down the street recently sold for
$900,000. What value, before consideration of accumulated
depreciation, is reported for the building on the balance sheet at
December 31, 2022? Answer: $200,000
⩥ The principle stating that assets acquired by the business should be
recorded at their actual cost on the date of purchase is: Answer:
historical cost.
⩥ The assets of a company: Answer: resources that are expected to
produce a future benefit.
⩥ Receivables are classified as: Answer: assets
⩥ Net income is computed as: Answer: revenues − expenses.
⩥ At the end of the current accounting period, account balances were as
follows: Cash, $28,000; Accounts Receivable, $40,000; Common Stock,
,$19,000; Retained Earnings, $12,000. Liabilities at the end of the period
were: Answer: $37,000.
⩥ Jonathan is a patent attorney and is starting a legal practice. What
form of business organization limits his liability to the amount he has
invested in the business? Answer: Corporation
⩥ Revenues were $144,000, expenses were $140,000, and cash
dividends declared and paid were $2,000. What were the net income and
the change in retained earnings for the period? Answer: Net income was
$4,000; the change in retained earnings was $2,000.
⩥ Which financial statement answers the following question: How well
did the company perform during the year? Answer: income statement
⩥ The portion of net income that the company has kept over a period of
years and not used for dividends is called: Answer: retained earnings.
⩥ The balance sheet reports information about: Answer: assets,
liabilities, and equity.
⩥ Which financial statement must be prepared before the others?
Answer: income statement
, ⩥ The ending balance of Retained Earnings is reported on the: Answer:
Balance Sheet & Statement of Retained Earnings.
⩥ As a practical matter, most companies prepare financial statements:
Answer: at the end of the accounting period.
⩥ When services are performed on account: Answer: accounts
receivable is increased.
⩥ The debt created by a business when it makes a purchase of inventory
on account is a(n): Answer: account payable.
⩥ When a company borrows money (cash) from the bank, which type of
account(s) is(are) increased? Answer: both asset and liability accounts
⩥ The left side of a T−account is always the: Answer: debit side.
⩥ Wetzel Company has the following accounts and balances at the end
of the first year of operations:
Long−Term Notes Payable $150,000
Accounts Receivable $31,000
Accounts Payable $38,000 Building $55,000 Cash and Cash Equivalents
$60,000 Salaries Expense
$20,500 Common Stock
