38.
Award: 1.00 point
The transaction, "provided services for cash," affects which two accounts?
Revenue and Expense
Cash and Revenue
Cash and Expense
Cash and Dividends
Providing services for cash increases a company's assets (cash) and stockholders’ equity (revenue, which closes to retained earnings).
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-04 Show how business events affect the
accounting equation.
During the year, Millstone Company earned $6,500 of cash revenue, paid cash dividends of $1,000 to stockholders and paid $4,000 for cash expenses.
Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements?
Assets increased by $6,500.
Assets increased by $1,500.
Stockholders’ equity increased by $2,500.
Assets increased by $5,500.
Change in stockholders’ equity = Revenue − Expenses − Dividends
Change in stockholders’ equity = $6,500 − $4,000 − $1,000 = $1,500
If there was no change in liabilities, the change in assets must also equal $1,500.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-04 Show how business events affect the
accounting equation.
39.
Award: 1.00 point
40.
Award: 1.00 point
At the end of Year 2, retained earnings for the Baker Company was $3,650. Revenue earned by the company in Year 2 was $3,900, expenses paid during the
period were $2,050, and dividends paid during the period were $1,450. Based on this information alone, what was the amount of retained earnings at the
beginning of Year 2?
$7,800
$4,050
$3,250
$1,800
Beginning Retained Earnings + Revenue − Expenses − Dividends = Ending Retained Earnings
Beginning Retained Earnings + $3,900 − $2,050 − $1,450 = $3,650
Beginning Retained Earnings = $3,250
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
At the end of Year 2, retained earnings for the Baker Company was $3,500. Revenue earned by the company in Year 2 was $1,500, expenses paid during the
period were $800, and dividends paid during the period were $500. Based on this information alone, what was the amount of retained earnings at the
beginning of Year 2?
$3,300
$3,700
$2,800
$3,800
Beginning Retained Earnings + Revenue − Expenses − Dividends = Ending Retained Earnings
Beginning Retained Earnings + $1,500 − $800 − $500 = $3,500
Beginning Retained Earnings = $3,300
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
41.
Award: 1.00 point
42.
Award: 1.00 point
43.
Award: 1.00 point
Which of the following is not an asset use transaction?
Paying cash dividends
Paying cash expenses
Paying off the principal of a loan
Paying cash to purchase land
Paying cash to purchase land is an asset exchange transaction.
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 1 Easy Learning Objective: 01-06 Classify
business events as asset source,
use, or exchange transactions.
Borrowing cash from the bank is an example of which type of transaction?
Asset source
Claims exchange
Asset use
Asset exchange
Borrowing cash is an asset source transaction that increases a business's assets (cash) and increases its liabilities (notes payable).
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-06 Classify business events as asset source,
use, or exchange transactions.
Which of the following could describe the effects of an asset exchange transaction on the accounting equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− n/a n/a
B. + n/a +
C. − n/a −
D. + + n/a
Option A
Option B
Option C
Option D
An asset exchange transaction is one that increases one asset account and decreases another, resulting in no net change in assets. There are no changes to