CBAD 201 Final Exam 2025 –
Complete Study Guide & Key
Concepts
The owner of a ________ is personally liable for all the business's debts. - 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? - 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: - ANSWER ✨✔---historical cost.
The assets of a company: - ANSWER ✨✔---resources that are expected to produce a future
benefit.
Receivables are classified as: - ANSWER ✨✔---assets
Net income is computed as: - 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: - 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? - 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? - ANSWER ✨✔---
Net income was $4,000; the change in retained earnings was $2,000.
Which financial statement ANSWERwers the following question: How well did the company perform
during the year? - 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: - ANSWER ✨✔---retained earnings.
The balance sheet reports information about: - ANSWER ✨✔---assets, liabilities, and equity.
Which financial statement must be prepared before the others? - ANSWER ✨✔---income
statement
The ending balance of Retained Earnings is reported on the: - ANSWER ✨✔---Balance Sheet &
Statement of Retained Earnings.
As a practical matter, most companies prepare financial statements: - ANSWER ✨✔---at the end of
the accounting period.
When services are performed on account: - ANSWER ✨✔---accounts receivable is increased.
, The debt created by a business when it makes a purchase of inventory on account is a(n): -
ANSWER ✨✔---account payable.
When a company borrows money (cash) from the bank, which type of account(s) is(are) increased? -
ANSWER ✨✔---both asset and liability accounts
The left side of a T−account is always the: - 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 - ANSWER ✨✔---$208,500
Which of the following statements, regarding the rules of debits and credits, is CORRECT? -
ANSWER ✨✔---Revenue is increased by a credit.
Company A received cash and issued stock to a new stockholder. In recording this trANSWERaction: -
ANSWER ✨✔---Cash would be debited.
Complete Study Guide & Key
Concepts
The owner of a ________ is personally liable for all the business's debts. - 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? - 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: - ANSWER ✨✔---historical cost.
The assets of a company: - ANSWER ✨✔---resources that are expected to produce a future
benefit.
Receivables are classified as: - ANSWER ✨✔---assets
Net income is computed as: - 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: - 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? - 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? - ANSWER ✨✔---
Net income was $4,000; the change in retained earnings was $2,000.
Which financial statement ANSWERwers the following question: How well did the company perform
during the year? - 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: - ANSWER ✨✔---retained earnings.
The balance sheet reports information about: - ANSWER ✨✔---assets, liabilities, and equity.
Which financial statement must be prepared before the others? - ANSWER ✨✔---income
statement
The ending balance of Retained Earnings is reported on the: - ANSWER ✨✔---Balance Sheet &
Statement of Retained Earnings.
As a practical matter, most companies prepare financial statements: - ANSWER ✨✔---at the end of
the accounting period.
When services are performed on account: - ANSWER ✨✔---accounts receivable is increased.
, The debt created by a business when it makes a purchase of inventory on account is a(n): -
ANSWER ✨✔---account payable.
When a company borrows money (cash) from the bank, which type of account(s) is(are) increased? -
ANSWER ✨✔---both asset and liability accounts
The left side of a T−account is always the: - 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 - ANSWER ✨✔---$208,500
Which of the following statements, regarding the rules of debits and credits, is CORRECT? -
ANSWER ✨✔---Revenue is increased by a credit.
Company A received cash and issued stock to a new stockholder. In recording this trANSWERaction: -
ANSWER ✨✔---Cash would be debited.
