201 FS 9 Transaction Analysis-Balance Sheet--Key

201 FS 9 Transaction Analysis-Balance Sheet--Key - 201...

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201 Transaction Analysis—Balance Sheet 1. A company paid $40,000 for inventory. How will this transaction affect the fundamental accounting equation? a. No effect b. Increase assets, increase equities c. Debit cash; credit inventory d. Debit inventory; credit cash e. None of the above 2. A company issued 50,000 shares of $5 common stock for $300,000. How will this transaction affect the fundamental accounting equation? a. Debit cash, $300,000; credit common stock $300,000 b. Debit cash, $300,000; credit common stock $250,000; credit additional paid in capital $50,000 c. Increase assets $300,000; increase liabilities $300,000 d. Increase assets $300,000; increase equities $300,000 e. None of the above 3. A company purchased $30,000 of inventory on account. If the company failed to record this transaction, how is the fundamental accounting equation affected at the time the money is received? a. Assets are understated; liabilities are understated b. Assets are understated; liabilities are overstated c. Assets are overstated; liabilities are understated d. Assets are overstated; liabilities are overstated e. None of the above 4. A company paid $80,000 to rent an office. The rental contract begins in two months. If the company failed to record this transaction, how will the basic accounting equation be affected on the date the rent is paid? a. Cash is overstated; liabilities are understated b. Cash is understated; liabilities are overstated c. Cash is understated; liabilities are understated d. Cash is overstated; equities are overstated e. None of the above 5. A company sold $700,000 in merchandise that had an original cost of $450,000. The
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This note was uploaded on 03/12/2010 for the course ACCY 201 taught by Professor Susancurtis during the Fall '09 term at University of Illinois, Urbana Champaign.

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201 FS 9 Transaction Analysis-Balance Sheet--Key - 201...

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