ACCOUNTING 200 - EXAM 1 2025
QUESTIONS AND ANSWERS
Which of the following is a characteristic of a sole proprietorship? - ANS The owner is
personally responsible for the debts of the business even if the debts are more than the owner
has invested in the business
Select the financing activities from the list below. (Select all that apply.) - ANS - Issued Stock
- Issued a Notes Payable
Financial information needed to manage a company is provided by a(n) ______ system. -
ANS Accounting
The balance sheet reports the ________. - ANS describes the financial situation of a
company at a specific point in time
If a company's total assets equals $60,000 and its shareholders' equity equals $30,000, how
much are the creditors' claims to the company's assets? - ANS - Use the accounting equation:
Assets = Liabilities + Shareholder's Equity
Answer: 30,000
Which of the following are assets? (Select all that apply.) - ANS - Inventory
- Land
- Equipment
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, - Supplies
Morris Lest, Inc., purchased machinery for $10,000 cash. The effect of this transaction is to
cause ______. - ANS total assets to remain the same
Par for the Course, Inc., purchased equipment for $60,000 by issuing a $20,000 note and paying
the remainder with cash. What is the net effect of this transaction for each column in the
accounting equation? - ANS Assets = 20,000 increase
Liabilities = 20,000 increase
Shareholder's Equity = NO EFFECT
Record the transaction: Suage, Inc., paid $6,000 cash for 1,000 sausages at $6 each. -
ANS Assets = 6,000 inventory; (6,000) cash
Liabilities = NO EFFECT
Stock = NO EFFECT
Retained Earnings = NO EFFECT
True or false: An exchange of promises is a transaction that affects the accounting equation. -
ANS FALSE
Show the effect of the transaction: Cap & Trade, Inc., sold 300 baseball caps that cost $6 each
to customers for $3,000 cash. - ANS Assets = 3,000 cash; (1,800) inventory
Liabilities = NO EFFECT
Retained Earnings = 3,000 sales revenue; (1,800) cost of goods sold
Show the effect of the transaction: Wursthaus, Inc., paid a $30 cash dividend to its owners. -
ANS Assets = (30) Cash
Liabilities = NO EFFECT
Stock = NO EFFECT
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 2
QUESTIONS AND ANSWERS
Which of the following is a characteristic of a sole proprietorship? - ANS The owner is
personally responsible for the debts of the business even if the debts are more than the owner
has invested in the business
Select the financing activities from the list below. (Select all that apply.) - ANS - Issued Stock
- Issued a Notes Payable
Financial information needed to manage a company is provided by a(n) ______ system. -
ANS Accounting
The balance sheet reports the ________. - ANS describes the financial situation of a
company at a specific point in time
If a company's total assets equals $60,000 and its shareholders' equity equals $30,000, how
much are the creditors' claims to the company's assets? - ANS - Use the accounting equation:
Assets = Liabilities + Shareholder's Equity
Answer: 30,000
Which of the following are assets? (Select all that apply.) - ANS - Inventory
- Land
- Equipment
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 1
, - Supplies
Morris Lest, Inc., purchased machinery for $10,000 cash. The effect of this transaction is to
cause ______. - ANS total assets to remain the same
Par for the Course, Inc., purchased equipment for $60,000 by issuing a $20,000 note and paying
the remainder with cash. What is the net effect of this transaction for each column in the
accounting equation? - ANS Assets = 20,000 increase
Liabilities = 20,000 increase
Shareholder's Equity = NO EFFECT
Record the transaction: Suage, Inc., paid $6,000 cash for 1,000 sausages at $6 each. -
ANS Assets = 6,000 inventory; (6,000) cash
Liabilities = NO EFFECT
Stock = NO EFFECT
Retained Earnings = NO EFFECT
True or false: An exchange of promises is a transaction that affects the accounting equation. -
ANS FALSE
Show the effect of the transaction: Cap & Trade, Inc., sold 300 baseball caps that cost $6 each
to customers for $3,000 cash. - ANS Assets = 3,000 cash; (1,800) inventory
Liabilities = NO EFFECT
Retained Earnings = 3,000 sales revenue; (1,800) cost of goods sold
Show the effect of the transaction: Wursthaus, Inc., paid a $30 cash dividend to its owners. -
ANS Assets = (30) Cash
Liabilities = NO EFFECT
Stock = NO EFFECT
Copyright ©2025 BRIGHTSTARS ALL RIGHTS RESERVED 2
