ACC 231 EXAM 3 Question and
answers verified to pass 2025/2026
The statement of cash flows explains how a company generates and uses cash during an accounting
period. - correct answer ✔true
Which of the following is an example of a cash flow from operations? - correct answer ✔the sale of
merchandise inventory for cash
In the terminology of the statement of cash flows, which of the following is an example of an investing
activity? - correct answer ✔the purchase of land for a new factory
In the terminology of the statement of cash flows, which of the following is an example of a financing
activity? - correct answer ✔the repayment of long-term debt
On the statement of cash flows, the payment of $50,000 in dividends would be classified as a(n) -
correct answer ✔financing activity.
On the statement of cash flows, the payment of $40,000 in interest would be classified as a(n) - correct
answer ✔operating activity.
A company sells a piece of equipment and realizes a gain of $15,000. At the time of the sale, the
equipment, which had been purchased for $185,000, had accumulated depreciation which totaled
$120,000. The proceeds from the sale must have been: - correct answer ✔$80,000
A balance in deferred tax expense due within three years would be reported as what on the balance
sheet? - correct answer ✔long term liability
, A company offers customers a one year warranty and sales totaled $950,000 for the year. The estimated
product warranty is 2% of sales and the company incurred repair costs of $14,000 this year. Which entry
would be made to record accrued product warranty. - correct answer ✔Warranty Expense 19,000
Warranty Payable 19,000
A contingent liability should be recorded in the accounts if it ____. - correct answer ✔is probable and
can be reasonably estimated
Which of the following is a right of stock ownership? - correct answer ✔Each of the items is correct are
stockholder rights
The number of shares of stock held by the stockholders is called ____. - correct answer ✔Outstanding
stock
One preference right enjoyed by preferred stockholders is ____. - correct answer ✔Preference to
dividends
Eagle Eye, Inc. issued 20,000 shares of $20 par common stock at $50. Which journal reflects this
transaction? - correct answer ✔Cash 1,000,000
Common stock 400,000
Paid-in capital in excess of par 600,000
Ed. Corp.
Assume Ed. Corp. has 50,000 shares of $10 par stock issued and outstanding. Ed. purchases 2,000 shares
of treasury stock at $20 per share.
answers verified to pass 2025/2026
The statement of cash flows explains how a company generates and uses cash during an accounting
period. - correct answer ✔true
Which of the following is an example of a cash flow from operations? - correct answer ✔the sale of
merchandise inventory for cash
In the terminology of the statement of cash flows, which of the following is an example of an investing
activity? - correct answer ✔the purchase of land for a new factory
In the terminology of the statement of cash flows, which of the following is an example of a financing
activity? - correct answer ✔the repayment of long-term debt
On the statement of cash flows, the payment of $50,000 in dividends would be classified as a(n) -
correct answer ✔financing activity.
On the statement of cash flows, the payment of $40,000 in interest would be classified as a(n) - correct
answer ✔operating activity.
A company sells a piece of equipment and realizes a gain of $15,000. At the time of the sale, the
equipment, which had been purchased for $185,000, had accumulated depreciation which totaled
$120,000. The proceeds from the sale must have been: - correct answer ✔$80,000
A balance in deferred tax expense due within three years would be reported as what on the balance
sheet? - correct answer ✔long term liability
, A company offers customers a one year warranty and sales totaled $950,000 for the year. The estimated
product warranty is 2% of sales and the company incurred repair costs of $14,000 this year. Which entry
would be made to record accrued product warranty. - correct answer ✔Warranty Expense 19,000
Warranty Payable 19,000
A contingent liability should be recorded in the accounts if it ____. - correct answer ✔is probable and
can be reasonably estimated
Which of the following is a right of stock ownership? - correct answer ✔Each of the items is correct are
stockholder rights
The number of shares of stock held by the stockholders is called ____. - correct answer ✔Outstanding
stock
One preference right enjoyed by preferred stockholders is ____. - correct answer ✔Preference to
dividends
Eagle Eye, Inc. issued 20,000 shares of $20 par common stock at $50. Which journal reflects this
transaction? - correct answer ✔Cash 1,000,000
Common stock 400,000
Paid-in capital in excess of par 600,000
Ed. Corp.
Assume Ed. Corp. has 50,000 shares of $10 par stock issued and outstanding. Ed. purchases 2,000 shares
of treasury stock at $20 per share.
