Test Bank for Financial Accounting 2nd Edition Spiceland, Thomas, Herrmann

1. Which of the following is not part of measuring external transactions? A. Using source documents to analyze accounts affected. B. Recording transactions. C. Making payments on all amounts owed. D. Analyzing transactions for their effect on the accounting equation. 2. External events include all of the following except: A. Paying employees' salaries. B. Purchasing equipment. C. Using office supplies. D. Collecting an account receivable. 3. Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits? A. Use source documents to determine accounts affected by the transaction. B. Prepare a trial balance. C. Analyze the impact of the transaction on the accounting equation. D. Post the transaction to the T-account in the general ledger. 4. For each transaction recorded in an accounting system, the basic equation that must be maintained at all times is: A. Assets = Liabilities + Stockholders' Equity. B. Cash Increases = Cash Decreases. C. Revenues = Expenses + Dividends. D. Assets = Liabilities. 5. The following amounts are reported in the ledger of Mariah Company: What is the balance in the Common Stock account? A. $44,000. B. $32,000. C. $48,000. D. $42,000. 6. When a company incurs workers' salaries but does not pay them, how will the basic accounting equation be affected? A. Stockholders' equity decreases. B. Revenues decrease. C. Expenses decrease. D. Liabilities decrease. 7. When cash payments are made to stockholders, what is the effect on the company's accounts? A. Cash decreases and dividends increase. B. Cash increases and dividends decrease. C. Cash decreases and common stock decreases. D. Cash increases and common stock increases. download full file at 8. Which of the following is not an asset account? A. Supplies. B. Accounts Payable. C. Equipment. D. Accounts Receivable. 9. An account receivable can best be defined as: A. A payment to the owners. B. A sale of goods and services. C. A resource owned by the company. D. An amount owed by the company. 10. Receiving assets from customers before services are performed results in: A. Prepaid Assets. B. Service Revenue. C. Unearned Revenues. D. Accounts Receivable. 11. When the company pays stockholders a dividend, what is the effect on the accounting equation for that company? A. Decrease stockholders' equity and increase assets. B. Increase liabilities and increase assets. C. Decrease assets and decrease liabilities. D. Decrease assets and decrease stockholders' equity. 12. Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash? A. No net effect to the accounting equation. B. Decrease assets and increase liabilities. C. Increase assets and increase liabilities. D. Decrease assets and decrease liabilities. 13. A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true? A. The company records service revenue on October 15. B. The company records cash collection November 20. C. The company records an unearned revenue on October 15. D. The company records nothing on October 15. 14. Which of the following would increase assets and increase liabilities? A. Provide services to customers on account. B. Purchase office supplies on account. C. Pay dividends to stockholders. D. Received a utility bill but do not pay for it. 15. Receiving cash from an account receivable: A. Increases a revenue and decreases an asset. B. Decreases a liability and increases an asset. C. Increases an asset and increases a revenue. D. Increases one asset and decreases another asset. 16. An expense has what effect on the accounting equation? A. Decrease liabilities. B. Decrease stockholders' equity. C. Increase assets. D. No effect. download full file at 17. A revenue has what effect on the accounting equation? A. Increase liabilities. B. Decrease assets. C. Increase stockholders' equity. D. No effect. 18. Investments by stockholders have what effect on the accounting equation? A. Assets increase and liabilities increase. B. Expenses increase and liabilities increase. C. Assets increase and revenues increase. D. Assets increase and stockholders' equity increases. 19. Which of the following is not possible when recording a transaction? A. Liabilities increase and assets decrease. B. Stockholders' equity increases and assets increase. C. One asset increases and another asset decreases. D. Stockholders' equity decreases and assets decrease. 20. Amounts owed to suppliers for supplies purchased on account are defined as: A. Cash. B. Accounts Receivable. C. Accounts Payable. D. Supplies Expense. 21. Purchasing office supplies on account will: A. Not change assets. B. Increase assets and decrease liabilities. C. Increase assets and increase liabilities. D. Increase assets and increase stockholders' equity. 22. Providing services and receiving cash will: A. Increase assets and increase stockholders' equity. B. Increase assets and increase liabilities. C. Decrease assets and increase liabilities. D. Decrease liabilities and increase stockholders' equity. 23. When a company provides services on account, the accounting equation would be affected as follows: A. Assets increase. B. Revenues increase. C. Assets increase and liabilities decrease. D. Assets increase and stockholders' equity increases. 24. If a company provides services on account, which of the following is true? A. Expenses increase. B. Liabilities increase. C. Stockholders' equity increases. D. Assets decrease. 25. When a payment is made on an account payable: A. Assets and stockholders' equity decrease. B. Assets and liabilities decrease. C. Liabilities and revenues