ACC. Chapter 1 QUESTIONS WITH
CORRECT ANSWERS.
What items are presented on the income statement? - Correct Answer 1) Net income
2) Expense
3) Revenue
Paying cash will cause the amount of cash to [blank] and the amount of retained earnings to [blank] -
Correct Answer decrease/decrease
Which of the following lists includes only items that are reported on the balance sheet? - Correct
Answer Assets, liabilities, stockholder's equity, and retained earnings
Revenue - Correct Answer economic benefits caused by operating a business
Expenses - Correct Answer economic sacrifices incurred to generate revenue
Liabilities - Correct Answer obligations to pay creditors
dividend - Correct Answer wealth transfers from a business to its owners/investors
What are the primary categories reported on the statement of cash flows? - Correct Answer Financing,
investing and operating
Businesses frequently trade one asset for another asset. The amount of asset decreases and the amount
of another asset [blank], while the total amount of asset is not affected. - Correct Answer increase
For the period ended, indicates that the information reported on the financial statement refers to -
Correct Answer what happened over the accounting period
, Recognizing cash revenue will cause assets on the [blank] side of the accounting equation to [blank] and
retained earnings on the [blank] side of the accounting equation to [blank] - Correct Answer
left/increase/right/increase
Acquiring cash by issuing common stock will cause the amount of - Correct Answer -common stock to
increase
-cash to increase
What is considered an investing activity? - Correct Answer -selling equipment
Borrowing money from credits will cause the - Correct Answer -right side of the accounting equation to
increase
-left side of the accounting equation to increase
Businesses convert [blank] to goods and services that are demanded by consumers - Correct Answer
resources
Assets are normally shown on the company's book at the amount of - Correct Answer their historical
cost
How does declaring and paying a cash dividend affect the financial statements? - Correct Answer -
decreases retained earnings
-decreases stockholder's equity
What affect does earning cash revenue have on financial statements? - Correct Answer -increases cash
flow from operating activities
-increases total stockholder's equity
-increases retained earnings
-increases total assets
-increases net income
CORRECT ANSWERS.
What items are presented on the income statement? - Correct Answer 1) Net income
2) Expense
3) Revenue
Paying cash will cause the amount of cash to [blank] and the amount of retained earnings to [blank] -
Correct Answer decrease/decrease
Which of the following lists includes only items that are reported on the balance sheet? - Correct
Answer Assets, liabilities, stockholder's equity, and retained earnings
Revenue - Correct Answer economic benefits caused by operating a business
Expenses - Correct Answer economic sacrifices incurred to generate revenue
Liabilities - Correct Answer obligations to pay creditors
dividend - Correct Answer wealth transfers from a business to its owners/investors
What are the primary categories reported on the statement of cash flows? - Correct Answer Financing,
investing and operating
Businesses frequently trade one asset for another asset. The amount of asset decreases and the amount
of another asset [blank], while the total amount of asset is not affected. - Correct Answer increase
For the period ended, indicates that the information reported on the financial statement refers to -
Correct Answer what happened over the accounting period
, Recognizing cash revenue will cause assets on the [blank] side of the accounting equation to [blank] and
retained earnings on the [blank] side of the accounting equation to [blank] - Correct Answer
left/increase/right/increase
Acquiring cash by issuing common stock will cause the amount of - Correct Answer -common stock to
increase
-cash to increase
What is considered an investing activity? - Correct Answer -selling equipment
Borrowing money from credits will cause the - Correct Answer -right side of the accounting equation to
increase
-left side of the accounting equation to increase
Businesses convert [blank] to goods and services that are demanded by consumers - Correct Answer
resources
Assets are normally shown on the company's book at the amount of - Correct Answer their historical
cost
How does declaring and paying a cash dividend affect the financial statements? - Correct Answer -
decreases retained earnings
-decreases stockholder's equity
What affect does earning cash revenue have on financial statements? - Correct Answer -increases cash
flow from operating activities
-increases total stockholder's equity
-increases retained earnings
-increases total assets
-increases net income
