True
False
This is false. Because asset use transactions result in a decrease in total assets, total claims must decrease as well.
References
True / False Difficulty: 2 Medium Learning Objective: 01-06 Classify business events as asset source,
use, or exchange transactions.
144.
Award: 1.00 point
145.
Award: 1.00 point
The four financial statements prepared by a business bear no relationship to each other.
True
False
This is false. All four financial statements are interconnected.
References
True / False Difficulty: 1 Easy Learning Objective: 01-07 Prepare an income statement, a
statement of changes in stockholders equity, and a balance sheet.
All of a business's temporary accounts appear on the income statement.
True
False
This is false. A business's temporary accounts include revenues, expenses, and dividends. Dividends do not appear on the income statement.
References
True / False Difficulty: 2 Medium Learning Objective: 01-09 Distinguish between permanent and
temporary accounts.
1.
Award: 10.00 points
2.
Award: 10.00 points
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Walker Company was formed on January 1, Year 1, when it acquired $150,000 cash from issuing common stock.
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
I NA I
Issuing common stock is an asset source transaction that increases the business's assets (cash) and its stockholders' equity (common stock).
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-04 Show how business events affect the
accounting equation.
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Nguyen Company borrowed $50,000 cash from Metropolitan Bank.
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
I I NA
Borrowing cash is an asset source transaction that increases a business's assets (cash) and its liabilities (notes payable).
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-04 Show how business events affect the
accounting equation.
3.
Award: 10.00 points
4.
Award: 10.00 points
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Bell Company provided consulting services for $20,000 cash.
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
Balance Sheet
Assets = Liabilities + Stockholders’ Equity
I NA I
This is an asset source transaction that increases the business's assets (cash). When a business provides services, it earns revenue. Revenue increases net
income, which will increase stockholders’ equity (retained earnings) at the end of the accounting period.
References
Short Answer Difficulty: 3 Hard Learning Objective: 01-04 Show how business events affect the
accounting equation.
Indicate how this event affects the accounting equation. Use the following letters to record your answer in the box shown below each element. If an event
increases one account and decreases another account within the same element, record I/D. If an event has no impact on the element, record NA. You do not
need to enter amounts.
Increase = I Decrease = D Not Affected = NA
Pierce Company paid $40,000 cash to purchase land.
Balance Sheet