73 Free Test Bank for Financial Accounting Information for Decisions 6th Edition Ingram 

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Which of the following is not an asset?

•  a.inventory
•  b.contributed capital
•  c.equipment
•  d.furniture

Which one of the following is an investing activity?

•  a.sale of worn out factory equipment
•  b.sale of inventory to customers
•  c.collection of a loan
•  d.borrowing money from a bank

When starting a new business, in general, which of the following types of activities would have to occur before operating activities could begin?Investing Activities; Financing Activities (respectively)

•  a. Yes Yes
•  b. Yes No
•  c. No Yes
•  d. No No

Expenses are recorded when a business

•  a.sells equipment
•  b.consumes resources during the production and sale of goods or services
•  c.distributes money to owners
•  d.hires employees

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 (respectively )

•  a. decreased increased no change
•  b. increased increased no change
•  c. increased decreased increased
•  d. no change increased decreased
•  e. no change decreased increased

Which of the following is the correct representation of the accounting equation?

•  a.Assets = Liabilities + Owners' Equity - (Revenues - Expenses)
•  b.Assets + (Revenues + Expenses) = Liabilities + Owners' Equity
•  c.Assets + Liabilities + Owners' Equity = Revenues - Expenses
•  d.Assets - Liabilities = Owners' Equity + (Revenues - Expenses)

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(would increase); Total owners (equity would increase)(respectively)

•  a. No No
•  b. No Yes
•  c. Yes No
•  d. Yes Yes

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(be decreased); An asset would (be increased)(respectively)

•  a. Yes Yes
•  b. Yes No
•  c. No Yes
•  d. No No

Which one of the following is NOT an asset?

•  a.revenue
•  b.cash
•  c.inventory
•  d.equipment

Which of the following is a financing activity?

•  a.inventory for resale is purchased on credit
•  b.equipment to be used in the firm is purchased with cash
•  c.employees are paid their weekly wages in cash
•  d.a loan is obtained from the bank

A transaction is

•  a.a record of increases and decreases in the dollar amount associated with a resource
•  b.an event that causes increases or decreases in an account balance
•  c.another term for the accounting process
•  d.a check register for a bank account

Investing activities involve

•  a.the purchase of machinery and equipment
•  b.purchasing office supplies
•  c.obtaining financial resources from financial markets
•  d.payment of employee salaries

Paying off of a bank loan is a(n) ____________ activity?

•  a.operating
•  b.financing
•  c.investing
•  d.operating if it was a short-term loan; financing if it was a long-term loan

Which of the following accounts is a liability?

•  a.interest expense
•  b.interest payable
•  c.interest revenue
•  d.interest receivable

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

Owners’equity will decrease when

•  a.owners receive money from their corporation
•  b.an organization's profits are reinvested in the company
•  c.an organization borrows money
•  d.an organization pays cash for equipment

________ activities result when a company obtains financial resources from owners.

•  a.Investing
•  b.Operating
•  c.Financing
•  d.Risk free

A decision whether to borrow money or sell stock is an example of

•  a.a financing decision
•  b.an investing decision
•  c.an operating decision
•  d.a future decision

Assets can be defined as

•  a.resources under an organization's legal control
•  b.obligations of the organization
•  c.the amount of investment made by owners in a business
•  d.the profits earned by a corporation

Which type of activity is involved when goods are produced and delivered to customers or when services are provided to customers?

•  a.financing activities
•  b.investing activities
•  c.operating activities
•  d.accounting activities

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