the company’s liabilities and stockholders’ equity either.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-06 Classify business events as asset source,
use, or exchange transactions.
44.
Award: 1.00 point
45.
Award: 1.00 point
Which of the following does not describe the effects of an asset use transaction on the accounting equation?
Balance Sheet Income Statement
Assets = Liabilities + Equity Revenue − Expense = Net Income
A. − = − + NA NA − NA = NA
B. − = − + NA NA − NA = NA
C. − = NA + − NA − + = −
D. NA = + + NA + − + = −
Option A
Option B
Option C
Option D
An asset use transaction is one that decreases a business's assets and decreases either liabilities or stockholders’ equity. An asset use transaction may or may
not affect expenses. If the asset account decreased is cash, there will be an effect on cash flows.
References
Multiple Choice Learning Objective: 01-06 Classify
business events as asset source,
use, or exchange transactions.
Difficulty: 2 Medium Learning Objective: 01-10 Record
business events using a
horizontal financial statements
model.
Which of the following cash transactions results in an increase to one asset account and a decrease to another asset account?
Borrowing cash from a bank
Issuing common stock for cash
Purchasing land for cash
Providing services for cash
Purchasing land for cash is an asset exchange transaction that does not affect total assets. The asset (land) increases and the asset (cash) decreases.
Borrowing cash, issuing stock, and providing services for cash are all asset source transactions that increase assets.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-04 Show how business events affect the
accounting equation.
46.
Award: 1.00 point
47.
Award: 1.00 point
48.
Award: 1.00 point
Which of the following items appears in the investing activities section of the statement of cash flows?
Cash inflow from interest revenue.
Cash inflow from the issuance of common stock.
Cash outflow for the payment of dividends.
Cash outflow for the purchase of land.
Purchasing land (a long-lived asset) for cash is an investing activity. Issuing common stock and paying dividends are both financing activities. Cash inflow from
interest revenue is an operating activity.
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-08 Prepare a statement of cash flows.
Jackson Company had a net increase in cash from operating activities of $11,400 and a net decrease in cash from financing activities of $1,300. If the beginning
and ending cash balances for the company were $3,200 and $12,400, respectively, what is the net cash change from investing activities?
An outflow or decrease of $900.
An inflow or increase of $1,300.
An inflow or increase of $900.
Zero.
Beginning cash balance + Increase from operating activities − Decrease from financing activities +/− Increase or decrease from investing activities = Ending
cash balance
$3,200 + $11,400 − $1,300 +/− Increase or decrease from investing activities = $12,400
$900 = Decrease from investing activities
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-08 Prepare a statement of cash flows.
Jackson Company had a net increase in cash from operating activities of $10,000 and a net decrease in cash from financing activities of $2,000. If the
beginning and ending cash balances for the company were $4,000 and $11,000, respectively, what is the net cash change from investing activities?
An outflow or decrease of $1,000.
An inflow or increase of $2,000.
An inflow or increase of $1,000.
Zero
Beginning cash balance + Increase from operating activities − Decrease from financing activities +/− Increase or decrease from investing activities = Ending
cash balance $4,000 + $10,000 − $2,000 +/− Increase or decrease from investing activities = $11,000
$1,000 = Decrease from investing activities
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-08 Prepare a statement of cash flows.
49.
Award: 1.00 point
50.
Award: 1.00 point
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $39,000; Liabilities = ?;