ASU ACC 232 EXAM 1 -FINANCIAL ACCOUNTING I
|ACTUAL QUESTIONS AND VERIFIED
ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
A primary source of stockholders' equity is
a. income retained by the corporation.
b. appropriated retained earnings.
c. contributions by stockholders.
d. both income retained by the corporation and contributions by stockholders.
CORRECT ANSWER
d. both income retained by the corporation and contributions by stockholders.
Question 2
Stockholders' equity is generally classified into two major categories:
a. contributed capital and appropriated capital.
b. appropriated capital and retained earnings.
c. retained earnings and unappropriated capital.
d. earned capital and contributed capital.
CORRECT ANSWER
d. earned capital and contributed capital.
Question 3
Direct costs incurred to sell stock such as underwriting costs should be accounted for as
1
@THE STUDY VAULT
, 1. a reduction of additional paid-in capital.
2. an expense of the period in which the stock is issued.
3. an intangible asset.
a. 1
b. 2
c. 3
d. 1 or 3
CORRECT ANSWER
a. 1 (a reduction of additional paid-in capital.)
Question 4
Treasury shares are shares
a. held as an investment by the treasurer of the corporation.
b. held as an investment of the corporation.
c. issued and outstanding.
d. issued but not outstanding.
CORRECT ANSWER
d. issued but not outstanding.
Question 5
When treasury stock is purchased for more than the par value of the stock and the cost
method is used to account for treasury stock, what account(s) should be debited?
a. Treasury stock for the par value and paid-in capital in excess of par for the excess of the
purchase price over the par value.
b. Paid-in capital in excess of par for the purchase price.
c. Treasury stock for the purchase price.
2
@THE STUDY VAULT
|ACTUAL QUESTIONS AND VERIFIED
ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
A primary source of stockholders' equity is
a. income retained by the corporation.
b. appropriated retained earnings.
c. contributions by stockholders.
d. both income retained by the corporation and contributions by stockholders.
CORRECT ANSWER
d. both income retained by the corporation and contributions by stockholders.
Question 2
Stockholders' equity is generally classified into two major categories:
a. contributed capital and appropriated capital.
b. appropriated capital and retained earnings.
c. retained earnings and unappropriated capital.
d. earned capital and contributed capital.
CORRECT ANSWER
d. earned capital and contributed capital.
Question 3
Direct costs incurred to sell stock such as underwriting costs should be accounted for as
1
@THE STUDY VAULT
, 1. a reduction of additional paid-in capital.
2. an expense of the period in which the stock is issued.
3. an intangible asset.
a. 1
b. 2
c. 3
d. 1 or 3
CORRECT ANSWER
a. 1 (a reduction of additional paid-in capital.)
Question 4
Treasury shares are shares
a. held as an investment by the treasurer of the corporation.
b. held as an investment of the corporation.
c. issued and outstanding.
d. issued but not outstanding.
CORRECT ANSWER
d. issued but not outstanding.
Question 5
When treasury stock is purchased for more than the par value of the stock and the cost
method is used to account for treasury stock, what account(s) should be debited?
a. Treasury stock for the par value and paid-in capital in excess of par for the excess of the
purchase price over the par value.
b. Paid-in capital in excess of par for the purchase price.
c. Treasury stock for the purchase price.
2
@THE STUDY VAULT
