Accounting 200 - Exam 1 Prep; Questions &
Answers 100% Verified
Which of the following is a characteristic of a sole proprietorship? Correct answer-The
owner is personally responsible for the debts of the business even if the debts are more than
the owner has invested in the business
Selec...
Accounting 200 - Exam 1 Prep; Questions &
Answers 100% Verified
Which of the following is a characteristic of a sole proprietorship? Correct answer-The
owner is personally responsible for the debts of the business even if the debts are more than
the owner has invested in the business
Select the financing activities from the list below. (Select all that apply.) Correct answer--
Issued Stock
- Issued a Notes Payable
Financial information needed to manage a company is provided by a(n) ______ system.
Correct answer-Accounting
The balance sheet reports the ________. Correct answer-describes the financial situation
of a company at a specific point in time
If a company's total assets equals $60,000 and its shareholders' equity equals $30,000, how
much are the creditors' claims to the company's assets? Correct answer-- Use the
accounting equation: Assets = Liabilities + Shareholder's Equity
Answer: 30,000
Which of the following are assets? (Select all that apply.) Correct answer-- Inventory
Morris Lest, Inc., purchased machinery for $10,000 cash. The effect of this transaction is to
cause ______. Correct answer-total assets to remain the same
Par for the Course, Inc., purchased equipment for $60,000 by issuing a $20,000 note and paying
the remainder with cash. What is the net effect of this transaction for each column in the
accounting equation? Correct answer-Assets = 20,000 increase
Liabilities = 20,000 increase
Shareholder's Equity = NO EFFECT
Record the transaction: Suage, Inc., paid $6,000 cash for 1,000 sausages at $6 each.
Correct answer-Assets = 6,000 inventory; (6,000) cash
Liabilities = NO EFFECT
Stock = NO EFFECT
Retained Earnings = NO EFFECT
True or false: An exchange of promises is a transaction that affects the accounting equation.
Correct answer-FALSE
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