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FA chapter 2

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Quiz on FA chapter 2, created by meli ssa on 04/02/2019.
meli ssa
Quiz by meli ssa, updated more than 1 year ago
meli ssa
Created by meli ssa almost 6 years ago
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Resource summary

Question 1

Question
A shareholder’s investment of cash into the business will
Answer
  • decrease total assets.
  • decrease total liabilities.
  • increase shareholders’ equity
  • have no effect on total assets.

Question 2

Question
Purchasing a laptop computer on account will
Answer
  • increase total assets.
  • have no effect on shareholders’ equity
  • increase total liabilities.
  • all of the above.

Question 3

Question
Performing a service on account will
Answer
  • increase total liabilities.
  • increase shareholders’ equity
  • . increase total assets.
  • both b and c

Question 4

Question
Receiving cash from a customer on account will
Answer
  • increase total assets.
  • decrease liabilities.
  • increase shareholders’ equity
  • have no effect on total assets.

Question 5

Question
Purchasing computer equipment for cash will
Answer
  • decrease both total assets and shareholders’ equity
  • decrease both total liabilities and shareholders’ equity.
  • have no effect on total assets, total liabilities, or shareholders’ equity
  • increase both total assets and total liabilities.

Question 6

Question
Purchasing a building for $110,000 by paying cash of $15,000 and signing a note payable for $95,000 will
Answer
  • decrease total assets and increase total liabilities by $15,000.
  • increase both total assets and total liabilities by $95,000.
  • . increase both total assets and total liabilities by $110,000.
  • decrease both total assets and total liabilities by $15,000.

Question 7

Question
What is the effect on total assets and shareholders’ equity of paying the telephone bill as soon as it is received each month?
Answer
  • total assets: decrease Shareholders' equity: decrease
  • Total assets: no effect Shareholders' equity: decrease
  • Total assets: no effect Shareholders' equity: No effect
  • Total assets: decrease Shareholders' equity: no effect

Question 8

Question
Which of the following transactions will increase an asset and increase a liability?
Answer
  • Purchasing office equipment for cash
  • Paying an account payable
  • Buying equipment on account
  • Issuing shares

Question 9

Question
Which of the following transactions will increase an asset and increase shareholders’ equity?
Answer
  • Performing a service on account for a customer
  • Borrowing money from a bank
  • Purchasing supplies on account
  • Collecting cash from a customer on an account receivable

Question 10

Question
Where do we first record a transaction?
Answer
  • Journal
  • Account
  • Ledger
  • Trial balance

Question 11

Question
Which of the following is not an asset account?
Answer
  • Service Revenue
  • Share Capital
  • Salary Expense
  • None of the above accounts is an asset.

Question 12

Question
Which statement is false?
Answer
  • Dividends are increased by credits.
  • Assets are increased by debits.
  • Revenues are increased by credits.
  • Liabilities are decreased by debits.

Question 13

Question
The journal entry to record the receipt of land and a building and issuance of ordinary shares
Answer
  • debits Share Capital and credits Land and Building.
  • debits Land and Building and credits Share Capital.
  • debits Land and credits Share Capital.
  • debits Land, Building, and Share Capital

Question 14

Question
The journal entry to record the purchase of supplies on account
Answer
  • debits Supplies Expense and credits Supplies.
  • debits Supplies and credits Accounts Payable.
  • credits Supplies and debits Cash
  • credits Supplies and debits Accounts Payable.

Question 15

Question
If the credit to record the purchase of supplies on account is not posted,
Answer
  • liabilities will be understated.
  • expenses will be overstated.
  • assets will be understated.
  • shareholders’ equity will be understated

Question 16

Question
The journal entry to record a payment on account will
Answer
  • debit Expenses and credit Cash
  • debit Cash and credit Expenses.
  • debit Accounts Payable and credit Retained Earnings.
  • debit Accounts Payable and credit Cash.

Question 17

Question
If the credit to record the payment of an account payable is not posted,
Answer
  • cash will be overstated
  • liabilities will be understated.
  • expenses will be understated.
  • cash will be understated.

Question 18

Question
Which statement is false?
Answer
  • A trial balance lists all the accounts with their current balances.
  • A trial balance can be taken at any time
  • A trial balance can verify the equality of debits and credits.
  • A trial balance is the same as a Balance Sheet.

Question 19

Question
A business’s receipt of a $105,000 building, with a $65,000 mortgage payable and issuance of $40,000 of ordinary shares, will
Answer
  • increase shareholders’ equity by $40,000
  • increase assets by $65,000.
  • decrease assets by $65,000
  • increase shareholders’ equity by $105,000.

Question 20

Question
. Gartex, a new company, completed these transactions. 1. Shareholders invested $45,000 cash and inventory worth $28,000. 2. Sales on account, $20,000. What will Gartex’s total assets equal?
Answer
  • $93,000
  • . $73,000
  • $65,000
  • $53,000
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