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1 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Financial Accounting, 9e (Harrison/Horngren/Thomas) Chapter 2 Transaction Analysis
2.1 Learning Objective 2-1
1) A transaction is any event that has a financial impact on the business that can be measured reliably.
Answer: TRUE
Diff: 1
LO: 2-1
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
2) Every transaction has two sides—you give something and you receive something.
Answer: TRUE
Diff: 1
LO: 2-1
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
3) Which of the following is NOT a business transaction?
- The company sells goods on account.
- The company buys land for cash.
- The company is featured in a magazine article.
- The company sells stock for cash.
Answer: C
Diff: 2
LO: 2-1
AASCB: Analytical Skills
AICPA Bus Persp: Strategic/Critical Thinking
AICPA Functional: Measurement
4) Transactions:
- must be recorded for every company event.
- provide objective information about the financial impact on a company.
- are recorded only if the amounts are significant to the company.
- only have one side that needs to be recorded.
Answer: B
Diff: 1
LO: 2-1
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
Financial Accounting 9th Edition Harrison Test Bank Visit TestBankDeal.com to get complete for all chapters
2 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 5) Any event that has a financial impact on the business and can be measured reliably is a(n):
- expense.
- transaction.
- asset.
- journal.
Answer: B
Diff: 1
LO: 2-1
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
6) Which of the following business events would NOT be recorded in a company's accounting records?
- The company paid a monthly utility bill.
- The company issued 100 shares of common stock.
- The company purchased two acres of land for future plant expansion.
- The company signed a contract to provide services in the next accounting period.
Answer: D
Diff: 2
LO: 2-1
AASCB: Analytical Skills
AICPA Bus Persp: Strategic/Critical Thinking
AICPA Functional: Measurement
2.2 Learning Objective 2-2
1) The account is the basic summary device of accounting.
Answer: TRUE
Diff: 1
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
2) An accounts receivable usually specifies an interest rate.
Answer: FALSE
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
3) Assets include cash, land, and accounts payable.
Answer: FALSE
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
3 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4) Prepaid expenses are an asset.
Answer: TRUE
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
5) Income statement data appears as revenues and expenses under Retained Earnings.
Answer: TRUE
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
6) A record of all the changes in a particular asset, liability, or stockholders' equity during a period is
called a(n):
- transaction.
- trial balance.
- journal.
- account.
Answer: D
Diff: 1
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
7) Which of the following is a liability account?
- Retained Earnings
- Accrued Liabilities
- Accounts Receivable
- Prepaid Expenses
Answer: B
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
8) Goods purchased on account for future use in the business, such as store supplies, are called:
- accrued liabilities.
- expenses.
- revenues.
- prepaid expenses.
Answer: D
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
9) All of the following accounts would be considered assets EXCEPT for:
- Cash.
- Retained Earnings.
- Prepaid Expenses.
- Notes Receivable.
Answer: B
Diff: 2
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
10) Which account includes bank account balances?
- Accounts Receivable
- Notes Receivable
- Cash
- Prepaid Expenses
Answer: C
Diff: 1
LO: 2-2
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
11) Which of the following is a correct statement?
- Shareholders' equity is also called Proprietorship Equity.
- A proprietorship has more than one capital account.
- A partnership has a separate owner's equity account for each partner.
- Retained earnings is the owner's investment in the corporation.
Answer: C
Diff: 2
LO: 2-2
AASCB: Analytical Skills
AICPA Bus Persp: Strategic/Critical Thinking
AICPA Functional: Measurement
12) Notes payable, accounts payable, taxes payable and salaries payable are all examples of:
- liabilities.
- revenues.
- expenses.
- assets.
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