21 at the end of an accounting period the amount of net income earned by a company i 4352252

21.At the end of an accounting period, the amount of net income earned by a company is transferred to the balance sheet and reported under which one of the following categories?

a.owners' equity

b.liabilities

c.assets

d.all of the above

22.Which of the following is not an asset?

a.inventory

b.contributed capital

c.equipment

d.furniture

23.The Fast Freight Company purchased a new delivery truck by making a cash down payment and signing a note payable for the balance. How will assets, liabilities, and owners’ equity be affected by this transaction?

Assets                Liabilities           Equity

a.decreased            increased          no change

b.increased             increased          no change

c.increased             decreased         increased

d.no change            increased          decreased

e.no change            decreased         increased

24.Arch Company is a retailer.  It sold goods to customers for cash, from its inventory.  Which of the following effects would occur as part of this event?

An asset would      An asset would

be decreased          be increased

a.Yes                       Yes

b.Yes                       No

c.No                         Yes

d.No                         No

25.Lunar Company sold goods to customers from its inventory at a price greater than its cost. Which of the following effects would occur as part of this event?

Total assets                   Total owners

would increase               equity would increase

a.No                               No

b.No                               Yes

c.Yes                              No

d.Yes                              Yes

26.Orlando owns a supper club and needed to obtain funds for the business. A bank loaned the supper club $20,000. Concerning the supper club, which of the following increased as a result of this loan?

a.owners' equity

b.liabilities

c.revenues

d.expenses

27.Which of the following events is properly classified as an investing activity?

a.purchase of equipment

b.borrowing money from creditors

c.selling goods to customers

d.running the factory

28.Which of the following is an operating activity?

a.purchase of equipment

b.payment of cash dividends

c.sale of equipment

d.purchase of inventory

29.What effect do revenues and expenses eventually have on Retained Earnings?

Revenues      Expenses

a.decrease     decrease

b.decrease     increase

c.increase     increase

d.increase     decrease

30.Revenues are recorded when a business

a.creates resources by selling goods or services

b.borrows money

c.receives money from owners of the business

d.pays its employees

Posted in Uncategorized