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2 3 learning objective 2 3 1 if a company declares and pays a dividend to its stockh 4298022


2.3   Learning Objective 2-3


1) If a company declares and pays a dividend to its stockholders, both cash and expenses will decrease.


2) The rules for recording accounting transactions include all of the following EXCEPT:

A) Every transaction's net amount on the left side of the equation must equal the net amount on the right side of the equation.

B) Total assets must always equal total liabilities plus total equity.

C) Every transaction affects the financial statements of the business.

D) Both sides of the accounting equation must be affected.


3) Generally companies will prepare financial statements:

A) after every transaction.

B) only when both the balance sheet and income statement are affected.

C) at the end of the accounting period.

D) at the close of every business day.


4) When services are performed on account:

A) cash is increased.

B) revenue will not be recorded until the cash is received from the customer.

C) accounts receivable is increased.

D) accounts payable is increased.

5) A company received cash in exchange for issuing stock. This transaction increased assets and:

A) increased expenses.

B) increased revenues.

C) increased liabilities.

D) increased equity.


6) When a business purchases land on account:

A) both assets and stockholders' equity are increased.

B) assets are decreased and stockholder's equity is increased.

C) both assets and liabilities are increased.

D) assets are increased and liabilities are decreased.


7) The debt created by a business when it makes a purchase on account is a(n):

A) revenue.

B) prepaid expense.

C) account receivable.

D) account payable.


8) Which of the following transactions will increase Stockholders' Equity?

A) The company pays a dividend to its shareholders.

B) The company issues common stock to new shareholders.

C) The president of the company buys a new personal automobile.

D) The company makes a payment on account.

9) Which of the following transactions will increase one asset and decrease another asset?

A) The purchase of office supplies on account.

B) The performance of services on account.

C) The purchase of equipment for cash.

D) The performance of services for cash.


10) A company performed services for a customer for cash. This transaction increased assets and:

A) decreased equity.

B) increased liabilities.

C) increased expenses.

D) increased revenues.




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