Final Exam CBAD 201 questions with
100% correct answers
The owner of a ________ is personally liable for all the business's debts. - correct answer ✔✔
proprietorship
In 1990, Johnson Company purchased a building for $200,000. In 2022, a real estate professional says
the building has a fair value of $1,900,000. In 2022, a similar building down the street recently sold for
$900,000. What value, before consideration of accumulated depreciation, is reported for the building on
the balance sheet at December 31, 2022? - correct answer ✔✔ $200,000
The principle stating that assets acquired by the business should be recorded at their actual cost on the
date of purchase is: - correct answer ✔✔ historical cost.
The assets of a company: - correct answer ✔✔ resources that are expected to produce a future benefit.
Receivables are classified as: - correct answer ✔✔ assets
Net income is computed as: - correct answer ✔✔ revenues − expenses.
At the end of the current accounting period, account balances were as follows: Cash, $28,000; Accounts
Receivable, $40,000; Common Stock, $19,000; Retained Earnings, $12,000. Liabilities at the end of the
period were: - correct answer ✔✔ $37,000.
Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits
his liability to the amount he has invested in the business? - correct answer ✔✔ Corporation
Revenues were $144,000, expenses were $140,000, and cash dividends declared and paid were $2,000.
What were the net income and the change in retained earnings for the period? - correct answer ✔✔ Net
income was $4,000; the change in retained earnings was $2,000.
,Which financial statement answers the following question: How well did the company perform during
the year? - correct answer ✔✔ income statement
The portion of net income that the company has kept over a period of years and not used for dividends
is called: - correct answer ✔✔ retained earnings.
The balance sheet reports information about: - correct answer ✔✔ assets, liabilities, and equity.
Which financial statement must be prepared before the others? - correct answer ✔✔ income statement
The ending balance of Retained Earnings is reported on the: - correct answer ✔✔ Balance Sheet &
Statement of Retained Earnings.
As a practical matter, most companies prepare financial statements: - correct answer ✔✔ at the end of
the accounting period.
When services are performed on account: - correct answer ✔✔ accounts receivable is increased.
The debt created by a business when it makes a purchase of inventory on account is a(n): - correct
answer ✔✔ account payable.
When a company borrows money (cash) from the bank, which type of account(s) is(are) increased? -
correct answer ✔✔ both asset and liability accounts
The left side of a T−account is always the: - correct answer ✔✔ debit side.
Wetzel Company has the following accounts and balances at the end of the first year of operations:
Long−Term Notes Payable $150,000
Accounts Receivable $31,000
Accounts Payable $38,000 Building $55,000 Cash and Cash Equivalents
$60,000 Salaries Expense
, $20,500 Common Stock
$108,000 Interest Payable
$6,500 Land $43,000
Short−term Investments
$27,000 Income Taxes Payable
$14,000 Equipment $59,500
Supplies $30,000 Service Revenue
$99,000 Supplies Expense $38,000
Utility Expense $28,500
Income Tax Expense $23,000 - correct answer ✔✔ $208,500
Which of the following statements, regarding the rules of debits and credits, is CORRECT? - correct
answer ✔✔ Revenue is increased by a credit.
Company A received cash and issued stock to a new stockholder. In recording this transaction: - correct
answer ✔✔ Cash would be debited.
Accounting transactions are initially recorded in the: - correct answer ✔✔ journal.
Posting is: - correct answer ✔✔ copying the information from the journal to the ledger.
The entry to record the purchase of supplies on account includes a credit to: - correct answer ✔✔
Accounts Payable.
Jaye Company purchased a new building by signing a note for $25,000. The entry to record the
transaction is: - correct answer ✔✔ DEBIT: Building 25,000
CREDIT: Notes Payable
25,000
100% correct answers
The owner of a ________ is personally liable for all the business's debts. - correct answer ✔✔
proprietorship
In 1990, Johnson Company purchased a building for $200,000. In 2022, a real estate professional says
the building has a fair value of $1,900,000. In 2022, a similar building down the street recently sold for
$900,000. What value, before consideration of accumulated depreciation, is reported for the building on
the balance sheet at December 31, 2022? - correct answer ✔✔ $200,000
The principle stating that assets acquired by the business should be recorded at their actual cost on the
date of purchase is: - correct answer ✔✔ historical cost.
The assets of a company: - correct answer ✔✔ resources that are expected to produce a future benefit.
Receivables are classified as: - correct answer ✔✔ assets
Net income is computed as: - correct answer ✔✔ revenues − expenses.
At the end of the current accounting period, account balances were as follows: Cash, $28,000; Accounts
Receivable, $40,000; Common Stock, $19,000; Retained Earnings, $12,000. Liabilities at the end of the
period were: - correct answer ✔✔ $37,000.
Jonathan is a patent attorney and is starting a legal practice. What form of business organization limits
his liability to the amount he has invested in the business? - correct answer ✔✔ Corporation
Revenues were $144,000, expenses were $140,000, and cash dividends declared and paid were $2,000.
What were the net income and the change in retained earnings for the period? - correct answer ✔✔ Net
income was $4,000; the change in retained earnings was $2,000.
,Which financial statement answers the following question: How well did the company perform during
the year? - correct answer ✔✔ income statement
The portion of net income that the company has kept over a period of years and not used for dividends
is called: - correct answer ✔✔ retained earnings.
The balance sheet reports information about: - correct answer ✔✔ assets, liabilities, and equity.
Which financial statement must be prepared before the others? - correct answer ✔✔ income statement
The ending balance of Retained Earnings is reported on the: - correct answer ✔✔ Balance Sheet &
Statement of Retained Earnings.
As a practical matter, most companies prepare financial statements: - correct answer ✔✔ at the end of
the accounting period.
When services are performed on account: - correct answer ✔✔ accounts receivable is increased.
The debt created by a business when it makes a purchase of inventory on account is a(n): - correct
answer ✔✔ account payable.
When a company borrows money (cash) from the bank, which type of account(s) is(are) increased? -
correct answer ✔✔ both asset and liability accounts
The left side of a T−account is always the: - correct answer ✔✔ debit side.
Wetzel Company has the following accounts and balances at the end of the first year of operations:
Long−Term Notes Payable $150,000
Accounts Receivable $31,000
Accounts Payable $38,000 Building $55,000 Cash and Cash Equivalents
$60,000 Salaries Expense
, $20,500 Common Stock
$108,000 Interest Payable
$6,500 Land $43,000
Short−term Investments
$27,000 Income Taxes Payable
$14,000 Equipment $59,500
Supplies $30,000 Service Revenue
$99,000 Supplies Expense $38,000
Utility Expense $28,500
Income Tax Expense $23,000 - correct answer ✔✔ $208,500
Which of the following statements, regarding the rules of debits and credits, is CORRECT? - correct
answer ✔✔ Revenue is increased by a credit.
Company A received cash and issued stock to a new stockholder. In recording this transaction: - correct
answer ✔✔ Cash would be debited.
Accounting transactions are initially recorded in the: - correct answer ✔✔ journal.
Posting is: - correct answer ✔✔ copying the information from the journal to the ledger.
The entry to record the purchase of supplies on account includes a credit to: - correct answer ✔✔
Accounts Payable.
Jaye Company purchased a new building by signing a note for $25,000. The entry to record the
transaction is: - correct answer ✔✔ DEBIT: Building 25,000
CREDIT: Notes Payable
25,000
