Practice questions

Question 1

In a recent business transaction land was exchanged for cash. Did the amount of cash increase or decrease

Answer 1

Depends on the reporting entity to which the question pertains one person sold land another person bought land for the person that sold land cash increased but cash decreased for the person that bought land

Question 2

Guptas company has 250,000 od assets 60,000 of liabilities and 90,000 of common stock what percentage of assets was provided by retained earnings

Answer 2

find retained earnings:
assets+common stock +retained earnings

Question 3

true or false dividends are a retained earning

Answer 3

true dividends are what the company decides to give away to share holders from retained earnings

Question 4

Classify each of the following as
cash flow
operating cost
investing activity
financing activity

1-Acquired cash from owners
2-borrowed cash from creditors
3-paid cash to purchase land
4- earned cash revenue
5- paid cash for salary expenses
6- paid cash dividend
7- paid cash for interest

Answer 4

1- FA
2-FA
3-IA
4-OA
5-OA
6-FA
7-OA

Question 5

How do you find assets acquired from owners

Answer 5

Total assets/common stock

Question 6

How do you find the percent of assets aquired from earning activities

Answer 6

Retained earnings/Total assets

Question 7

how would you record this: Incurred $1,800 of expenses on account.

Answer 7

its something you have to pay so increase accounts payable.

The incurred expenses come out of retained earnings

incurred expenses get recorded under expense

Question 8

How do you record: Provided services for $4,300 cash.

Answer 8

increase cash

increase R/E

increase REV

increase net income

increase cash flow statement