See answers below the final exam.

1) Which financial statement is used to determine cash generated from operations?

A. Income statement B. Statement of operations C. Statement of cash flows D. Retained earnings statement

2) In terms of sequence, in what order must the four basic financial statements be prepared?

A. Balance sheet, income statement, statement of cash flows, and capital statement B. Income statement, capital statement, statement of cash flows, and balance sheet C. Balance sheet, capital statement, statement of cash flows, and income statement D. Income statement, capital statement, balance sheet, and statement of cash flows

3) In classifying transactions, which of the following is true in regard to assets?

A. Normal balances and increases are debits. B. Normal balances and decreases are credits. C. Normal balances can either be debits or credits for assets. D. Normal balances are debits and increases can be debits or credits.

4) An increase in an expense account must be

A. debited B. credited C. either debited or credited, depending on the circumstances D. capitalized

5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?

A.

Cash $100
Common Stock $100

B.

Cash $500
Common Stock $500

C.

Cash $500
Paid-in Capital, Excess of Par $400
Common Stock $100

D.

Cash $100
Paid-in Capital, Excess of Par $400
Common Stock $500

6) In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a

A. $600 credit balance B. $1,400 debit balance