Question

20)       A transaction has been recorded in the journal of Davis Company as follows:

Interest expense	800
Interest payable		800

Which of the following describes the effect of this transaction on the company’s financial statements?

            A)    Decreases liabilities       
            B)    Increases liabilities
            C)    Increases stockholders’ equity
            D)    Decreases assets

21)       Callahan Corporation recorded an adjusting entry using T-accounts as follows:

Interest Receivable
75

Interest Revenue
	75

Which of the following reflects how this adjustment affects the company's financial statements?

	Assets	=	Liab.	+	Stk. Equity	Rev.	−	Exp.	=	Net Inc.	Stmt of Cash Flows
A.	+	=	+	+	NA	NA	−	NA	=	NA	+FA
B.	+	=	NA	+	+	+	−	NA	=	+	NA
C.	+	=	NA	+	+	+	−	NA	=	+	+OA
D.	−	=	NA	+	NA	−	−	NA	=	−	NA

            A)    Option C
            B)    Option B
            C)    Option A
            D)    Option D

22)       Financial accounting information is usually less detailed than managerial accounting information.

            ⊚        true
            ⊚        false

23)       The value created by a business is created by its assets.

            ⊚        true
            ⊚        false

Answer 1

20)Increases liabilites

21)Option B is correct

interest recivable increases assets& revenue and no effect on liabilities and expenditure and statement of cash flow.

22)True

Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

23)True

Assets are items of value, such as property and equipment, which your company owns or leases in order to operate. They can also be a means of creating value in your business - for example, intellectual property, customer relations and goodwill.