2.1-25 Which of the following transactions would increase total assets? I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
A. I and II B. I and III
C. I, II, and III
D. All of these answers are correct. Answer: A
LO: 2-1
Diff: 3
EOC: E2-16
2.1-26 Consider the following transactions: I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200 Total assets would be: A. $96,800. B. $88,000. C. $90,000.
D. $98,000. Answer: C
LO: 2-1
Diff: 3
EOC: E2-16
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2.1-27 The payment of an amount owed to a creditor would:
A. decrease assets. B. increase net income.
C. decrease liabilities.
D. both decrease assets and decrease liabilities. Answer: D
LO: 2-1
Diff: 2
EOC: E2-15
2.1-28 The payment of salaries to employees would:
A. increase assets and increase liabilities. B. decrease net income and decrease assets. C. increase liabilities and increase net income. D. decrease assets and decrease liabilities. Answer: B
LO: 2-1
Diff: 2
EOC: S2-5
2.1-29 When a company performs a service and immediately collects the cash from the customer, which of the
following would occur?
A. Stockholders’ equity would decrease. B. Assets would decrease. C. Expenses would decrease. D. Net income would increase. Answer: D
LO: 2-1
Diff: 2
EOC: QC 3
2.1-30 Purchasing supplies on account would:
A. increase total assets and decrease total liabilities. B. increase total liabilities and decrease total assets. C. increase total assets and increase total liabilities. D. increase total liabilities and increase stockholders’ equity. Answer: C
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LO: 2-1
Diff: 2
EOC: E2-14
2.1-31 Paying a utility bill as soon as it was received would:
A. increase expenses. B. increase liabilities.
C. increase owners’ equity. D. decrease revenues. Answer: A
LO: 2-1
Diff: 2
EOC: E2-16
2.1-32 Borrowing money from the bank by signing a note payable would: A. increase stockholders’ equity. B. have no effect on stockholders’ equity. C. decrease liabilities.
D. increase net income. Answer: B
LO: 2-1
Diff: 2
EOC: E2-15
2.1-33 Receiving a payment from a customer on account would:
A. increase stockholders’ equity. B. have no effect on total assets. C. increase stockholders’ equity.
D. decrease liabilities. Answer: B
LO: 2-1
Diff: 2
EOC: E2-15
2.1-34 The purchase of land for cash would:
A. increase total assets.
B. decrease stockholders’ equity.
C. increase the total debits on the trial balance.
D. have no effect on total assets. Answer: D
LO: 2-1
Diff: 3
EOC: E2-15
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2.1-35 If a person starting a business had an investment of a building, valued at $300,000 with an $180,000
outstanding mortgage, the effect would be to:
A. increase assets by $120,000.
B. increase assets by $180,000.
C. increase stockholders’ equity by $120,000.
D. increase stockholders’ equity by $300,000. Answer: C
LO: 2-1
Diff: 3
EOC: E2-14
2.1-36 Performing services on account would: A. decrease both assets and liabilities.
B. increase assets and decrease stockholders’ equity. C. decrease revenue and decrease stockholders’ equity.
D. increase net income and stockholders’ equity. Answer: D
LO: 2-1
Diff: 3
EOC: E2-16
2.1-37 The collection of cash from a cash sale would: A. increase assets and stockholders’ equity. B. increase assets and decrease liabilities.
C. decrease assets and increase net income.
D. have no effect on net income or stockholders’ equity. Answer: A
LO: 2-1
Diff: 3
EOC: E2-16
2.1-38 Cash dividends paid to the stockholders will: A. increase assets and decrease liabilities. B. increase assets and increase liabilities.
C. have no effect on stockholders’ equity or revenue.
D. decrease assets and decrease stockholders’ equity. Answer: D
LO: 2-1
Diff: 3
EOC: E2-15
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2.1-39 Consider the following transactions: I. Borrowed cash on a note payable, $80,000 II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000 IV. Received a utility bill, $1,200 Total liabilities would be: A. $1,200. B. $81,200. C. $98,000.
D. $80,000. Answer: B
LO: 2-1
Diff: 3
2.1-40 Consider the following transactions: I. Owners invested $8,000 cash to begin the business II. Provided services for cash, $6,000 III. Provided services on account, $4,000 IV. Paid cash for expenses, $7,500 How much cash does the business have? A. $ 2,500 B. $ 4,500 C. $ 6,500
D. $10,500 Answer: C
LO: 2-1
Diff: 2
EOC: S2-2
EOC: S2-3
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