Question : 61.To appear in a balance sheet of a business entity, : 1237559

 

 

61.To appear in a balance sheet of a business entity, an asset need not:   

A.Be an economic resource.

 

B.Have a ready market value.

 

C.Be expected to benefit future operations.

 

D.Be owned by the business.

 

 

 

 

62.A balance sheet:   

A.Provides owners, investors, and other interested parties with all the financial information they need to evaluate the financial strength, profitability, and future prospects of a given business entity.

 

B.Shows the current market value of the owners’ equity in the business at the balance sheet date.

 

C.Assists creditors in evaluating the debt-paying ability of a business by showing the assets and liabilities of the business combined with those of its owner (or owners).

 

D.Shows the assets, liabilities, and owners’ equity of a business entity, valued in conformity with generally accepted accounting principles.

 

 

 

 

63.Which of the following is correct if a company purchases equipment for $70,000 cash?   

A.Total assets will increase by $70,000.

 

B.Total assets will decrease by $70,000.

 

C.Total assets will remain the same.

 

D.The company’s total owners’ equity will decrease.

 

 

 

 

64.If a company purchases equipment for $65,000 by issuing a note payable:   

A.Total assets will increase by $65,000.

 

B.Total assets will decrease by $65,000.

 

C.Total assets will remain the same.

 

D.The company’s total owners’ equity will decrease.

 

 

 

 

65.If a company has a profit:   

A.Assets will be equal to liabilities plus owners’ equity.

 

B.Assets will be less than liabilities plus owners’ equity.

 

C.Assets will be greater than liabilities plus owners’ equity.

 

D.Owners’ equity will be greater than its assets.

 

 

 

 

66.Capital stock represents:   

A.The amount invested in the business by stockholders when shares of stock were initially issued by a corporation.

 

B.The owners’ equity for a business organized as a corporation.

 

C.The owners’ equity accumulated through profitable operations that have not been paid out as dividends.

 

D.The price paid by the current owners to acquire shares of stock in the corporation, regardless of whether they bought the shares directly from the corporation or from another stockholder.

 

 

 

 

67.The balance sheet item that represents the portion of owners’ equity resulting from profitable operations of the business is:   

A.Accounts receivable.

 

B.Cash.

 

C.Capital stock.

 

D.Retained earnings.

 

 

 

 

68.Retained earnings appears on:   

A.The income statement.

 

B.The balance sheet.

 

C.The statement of cash flows.

 

D.All three of the financial statements.

 

 

 

 

At December 31, 2014, the accounting records of Braun Corporation contain the following items: 

 

69.Refer to the information above. If Capital Stock is $260,000, what is the December 31, 2014 cash balance?   

A.$86,000.

 

B.$94,000.

 

C.$46,000.

 

D.$686,000.

A/P ($16,000) + N/P ($190,000) + Capital Stock ($260,000) + R.E. ($160,000) = $626,000Cash (?) + A/R ($40,000) + Land ($240,000) + Building ($180,000) + Equipment ($120,000) = $626,000Cash = $46,000

 

 

 

70.Refer to the information above. If Capital Stock is $320,000, total assets of Braun Corporation at December 31, 2014, amounts to:   

A.$686,000.

 

B.$926,000.

 

C.$726,000.

 

D.$106,000.

A/P ($16,000) + N/P ($190,000) + Capital Stock ($320,000) + R.E. ($160,000) = $686,000Total Assets = $686,000