Acct 100

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

True or False

Straight-line depreciation = (cost + residual value) estimated useful life.

True or False

Declaration of dividends results in an increase in liabilities and a decrease in shareholders equity.

True or False

8) Under the accrual basis of accounting, expenses are

a) always paid in cash.

b) recorded only when paid.

c) recorded when incurred.

d) only relevant for the determination of net income.

9) Cost of goods sold should be matched up with the revenue generated on each year's Statement of Income because of the

a) revenue recognition criteria.

b) cash basis of accounting.

c) actual basis of accounting.

d) accrual basis of accounting.

10) A company received a $6,500 deposit from a customer for goods to be delivered the following month. Under the accrual and cash basis of accounting respectively, the account credited is a

Accrual basis Cash basis

a) liability liability

b) liability revenue

c) revenue liability

d) revenue revenue

11) How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

a) as an increase in Retained Earnings, and an increase in Cash

b) as an increase in Long-Term Investments, and a decrease in Cash

c) as an increase in Common Shares, and a decrease in Cash

d) as an increase in Common Shares, and an increase in Cash

12) The asset that results when a customer buys goods or services on credit is

a) Accounts receivable.

b) Accounts payable.

c) Notes receivable.

d) Cash.

13) When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

a) increase in Retained Earnings, increase in Dividends Declared

b) decrease in Cash, decrease in Dividends Payable

c) increase in Dividends Declared, increase in Dividends Payable

d) decrease in Dividends Payable, increase in Cash

14) Which of the following transactions would decrease the cash from operating activities?

a) the payment of dividends

b) the sale of goods on account

c) the purchase of goods on account

d) the payment of wages