Sample Final Exam Questions
Which of the following transactions will cause both the left and right side of the fundamental
accounting equation to increase
We collect cash from a customer who owed us money
We pay a supplier for inventory we previously bought on account
We borrow money from the bank
We purchase equipment for cash
None of the above will cause both sides of the equation to increase
As of 12/31/07, Alamo Autoworks, Inc. is involved in a lawsuit related to work performed in
It is probable that the jury will find in favor of the plaintiff and Alamo
Even though the trial is not yet comlete, Alamo should:
A. only disclose the possibility of losing $2,000,000 in a footnote to its 2007 financial
B. report a $2,000,000 liability on its 2007 balance sheet and a $2,000,000 loss on its 2007
C. report a $2,000,000 liability on its 2007 balance sheet but report nothing related to the lawsuit
on its 2007Income statement.
D. report a $2,000,000 loss on its 2007 income statement but report nothing
related to the
lawsuit on its 2007 balance sheet.
Shelley's Steel Company had the following transactions during 2007, its first year of operations.
On 1/l/07sold 10,000 shares of no par common stock for $200,000 cash
On 4/l/07 paid $60,000 cash to repurchase 2,000 shares of its common stock
On 12/20/07 declared and paid cash dividends of $32,000
Shelley's reported net income of $75,000 on its 2007 income statement
What amount of
total stockholders' equity
did Shelley's report on its 12/31/07 balance sheet?