42. A company receives $100,000 cash from investors in exchange for new common stock. Several weeks later, the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. The accounts involved in these two transactions are: a. Long-term Investments; Cash; Equipment; and Accounts Payable. b. Contributed Capital; Cash; Long-term Investments; and Notes Payable. C. Contributed Capital; Cash; Equipment; and Notes Payable. d. Retained Earnings; Equipment; and Notes Payable. AACSB: analytic AICPA BB: resource management AICPA FN: reporting Difficulty: Medium Learning Objective: 2 43. A company purchases $23,000 of supplies in the current month and promises to pay for them next month. How would the company record a liability for the supplies? a. This liability is not a recognized liability until the payment is due. B. $23,000 would be journalized as a credit to Accounts Payable. c. $23,000 would be journalized as a debit to Accounts Payable. d. $23,000 would be journalized as a debit to Prepaid Expenses. AACSB: analytic AICPA BB: resource management AICPA FN: measurement Difficulty: Medium Learning Objective: 2 44. If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during the same time period? a. $20,000 increase. B. $20,000 decrease. c. $30,000 increase. d. $30,000 decrease. analytic AICPA BB: resource management AICPA FN: reporting Difficulty: Easy Learning Objective: 2
42. A company receives $100,000 cash from investors in exchange for new common stock. Several weeks later, the company buys a $250,000 machine using all of the cash from the stock issue and signing a promissory note for the remainder. The accounts involved in these two transactions are: a. Long-term Investments; Cash; Equipment; and Accounts Payable. b. Contributed Capital; Cash; Long-term Investments; and Notes Payable. C. Contributed Capital; Cash; Equipment; and Notes Payable. d. Retained Earnings; Equipment; and Notes Payable. AACSB: analytic AICPA BB: resource management AICPA FN: reporting Difficulty: Medium Learning Objective: 2 43. A company purchases $23,000 of supplies in the current month and promises to pay for them next month. How would the company record a liability for the supplies? a. This liability is not a recognized liability until the payment is due. B. $23,000 would be journalized as a credit to Accounts Payable. c. $23,000 would be journalized as a debit to Accounts Payable. d. $23,000 would be journalized as a debit to Prepaid Expenses. AACSB: analytic AICPA BB: resource management AICPA FN: measurement Difficulty: Medium Learning Objective: 2 44. If total liabilities decreased by $25,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by what amount and direction during the same time period? a. $20,000 increase. B. $20,000 decrease. c. $30,000 increase. d. $30,000 decrease. analytic AICPA BB: resource management AICPA FN: reporting Difficulty: Easy Learning Objective: 2
Test-Bank-Fundamentals-of-Financial-Accounting-2nd-Edition-Phillips.docx