13. The collection of an account receivable will cause total assets to decrease. FALSE Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-03 Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners' Equity. Topic: A Starting Point: Statement of Financial Position 14. The payment of a liability causes an increase in owners' equity. FALSE Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-03 Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners' Equity. Topic: A Starting Point: Statement of Financial Position 15. When a business borrows money from a bank, the immediate effect is an increase in total assets and a decrease in liabilities or owners' equity. FALSE Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-03 Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners' Equity. Topic: A Starting Point: Statement of Financial Position 16. The purchase of an asset, such as office equipment, for cash will cause owners' equity to decrease. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-03 Demonstrate how certain business transactions affect the elements of the accounting equation: Assets = Liabilities + Owners' Equity. Topic: A Starting Point: Statement of Financial Position
21. A statement of cash flows reports revenue and expense activities for a specific time period such as one month or one year. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows 22. It is not unusual for an entity to report a significant increase in cash from operating activities, but a decrease in the total amount of cash. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows 23. The statement of cash flows provides a link between two balance sheets by showing how net income (or loss) has changed owners' equity from one balance sheet date to the next. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows 24. Articulation between the financial statements means that they relate closely to each other on the basis of the same underlying transaction information. TRUE
Cash ($62,500) + A/R ($18,750) + Land ($30,000) + Building ($31,250) + Equipment ($40,000) = $182,500 A/P ($2,500) + N/P (?) + Capital ($12,500) + R.E. ($125,000) = $182,500 $2,500 (Accounts Payable) + $42,500 (Notes Payable) = $45,000 Total Liabilities = $45,000 Analytic AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-04 Explain how the statement of financial position; often referred to as the balance sheet; is an expansion of the basic accounting equation. Topic: A Starting Point: Statement of Financial Position 83. Which of the following is correct if at the end of Crystal Imports' first year of operations, Assets are $800,000 and Owners' Equity is $720,000? $800,000(Assets) - $720,000(Owners' Equity) = $80,000 (Liabilities) Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-04 Explain how the statement of financial position; often referred to as the balance sheet; is an expansion of the basic accounting equation. Topic: A Starting Point: Statement of Financial Position 84. During the current year, the assets of Wheatley's increased by $362,000, and the liabilities increased by $260,000. The owners' equity in the business must have:
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows 107. Refer to the information above. A statement of cash flows for August, would report net cash flows from investing activities of: Equipment purchased = $40,000 used AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows 108. Refer to the information above. A statement of cash flows for August, would report an increase in cash of: $46,400 + $26,000 - $40,000 = $32,400 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 02-06 Explain how the statement of cash flows presents the change in cash for a period of time in terms of the company's operating; investing; and financing activities. Topic: Statement of Cash Flows