2.1 Questions - Financial Accounting, 2e (Kemp/Waybright) Chapt...

1 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Financial Accounting, 2e (Kemp/Waybright) Chapter 2 Analyzing and Recording Business Transactions

2.1 Questions

1) Account titles such as Marketing Expense and Depreciation Expense would be numbered starting with a 3.

Answer: FALSE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

2) A listing of all accounts in numerical order is called a chart of accounts.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

3) An account numbered 321 would be considered a stockholders' equity account as it begins with a 3.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

4) The stockholders' equity section would include the accounts such as retained earnings and revenues.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

Financial Accounting 2nd Edition Kemp Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 5) Items of value that a company owns are called stockholders' equity.

Answer: FALSE

Diff: 1

LO: 2-1

EOC Ref: Vocabulary

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

6) Obligations that are owed to others due to past transactions are categorized as:

• stockholders' equity.
• expenses.
• assets.
• liabilities.

Answer: D

Diff: 1

LO: 2-1

EOC Ref: Vocabulary

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

7) Monies owed to a company on a written promise to pay a fixed amount of money by a certain

date would be called a(n):

• note payable.
• note receivable.
• account payable.
• account receivable.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

8) Items such as salaries and interest that have been incurred, but not yet paid, are called:

• accrued assets.
• accrued liabilities.
• accrued revenues.
• accrued notes.

Answer: B

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

3 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

9) The order in which accounts appear in the chart of accounts is:

• liabilities, assets, revenues, stockholders' equity, expenses.
• stockholders' equity, expenses, revenue, liabilities, assets.
• assets, stockholders' equity, revenues, expenses, liabilities.
• assets, liabilities, stockholders' equity, revenues, expenses.

Answer: D

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting

10) An account starting with a number 1 would indicate:

• an asset.
• stockholders' equity.
• a revenue.
• a liability.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting

11) All payables are listed as:

• assets.
• liabilities.
• stockholders' equity.
• revenue.

Answer: B

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

12) Accounts that start with the numbers 6-9 would probably be:

• other revenues and expenses.
• other assets and liabilities.
• other stockholders' equity.
• other assets and revenues.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytic Skills

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting

13) A type of company asset in which a customer owes the company money would be a:

• dividend.
• receivable.
• payable.
• sale.

Answer: B

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

14) Expenses paid in advance such as rent and insurance are classified as prepaid expenses. Into what category are they placed?

• Liabilities
• Revenues
• Expenses
• Assets

Answer: D

Diff: 2

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling