Financial Accounting, 10e (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 and that can be measured reliabl
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Financial Accounting, 10e (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 and that can be measured reliably.
Answer: TRUE
Diff: 1
2) Which of the following is NOT a business transaction?
A) A company buys goods on account.
B) A company sells land for cash.
C) A company fired 10 percent of the employees due to lackluster sales.
D) A company borrows money from the bank.
Answer: C
2.2 Learning Objective 2-2
1) The account is the basic summary device used in accounting.
Answer: TRUE
2) An accounts receivable usually specifies an interest rate.
Answer: FALSE
3) Assets include cash, land, and accounts payable.
Answer: FALSE
4) Prepaid expenses are an asset.
Answer: TRUE
5) A record of all the changes in a particular asset during a period of time is found in a(n):
A) transaction.
B) trial balance.
C) prior period's balance sheet.
D) account.
Answer: D
6) All of the following accounts would be considered assets EXCEPT for:
A) Cash.
B) Retained Earnings.
C) Prepaid Expenses.
D) Notes Receivable.
Answer: B
7) Which account includes bank account balances in multiple checking accounts?
A) Accounts Receivable
B) Notes Receivable
C) Cash
D) Prepaid Expenses
Answer: C
8) Which of the following is a CORRECT statement?
A) Shareholders' equity is also called Proprietorship Equity.
B) A proprietorship has more than one capital account.
C) A partnership has a separate owner's equity account for each partner.
D) Retained earnings is the owner's investment in the corporation.
Answer: C
9) Notes payable, accounts payable, taxes payable and salaries payable are all examples of:
A) liabilities.
B) revenues.
C) expenses.
D) assets
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