occ ch.1 sb
Given that Jacob's Chocolates had owner investments of $4,000; net income during the period of $10,000; and owner withdrawals of $300 calculate the ending balance in the owner's capital account.
$13,700
Accounting certifications include:
CPA
Identify which items belong on the statement of owner's equity.
Owner, withdrawals, beginning owner, capital, ending owner, capital
Pete Jackson purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction in the accounting equation by:
decreasing Cash; increasing Equipment
During its first year of operations, Mario Lupo formed Lupo Company and personally invested $15,000 in the business. The owner of Lupo Company withdrew $2,000 cash for personal use. The company earned $35,000 of revenues and incurred $23,000 of expenses. At the end of the year, the company's equity totaled:
$25,000
If equity is $30,000 and liabilities are $19,000, then assets must equal:
$49,000
Sheldon Company had owner investments of $1,000; net income during the period of $5,000; and owner withdrawals of $250. The ending balance in the owner's capital account is
$5,750
On 6/25, supplies costing $1,000 were purchased, but only $400 of this amount was paid on 6/25. The remainder of the bill went on account. To record this transaction on 6/25: Supplies would be increased by $ (1,000/400/600); Cash would be decreased by $ (1,000/400/600) and Accounts Payable would be increased by $ (1,000/400/600).
1,000 400 600
Boaz Company had beginning of year assets of $100 million and end of year assets of $120 million. Boaz's net income is $5 million. Calculate Boaz Company's return on assets. Round your answer to 1 decimal place.
4.5% Reason: $5 million/[($100 million + $120 million/)2] = 4.5%
Rosalind Company reported revenues of $111,500, expenses of $92,545, and net income of $18,955 for the year. Assets totaled $200,000 at the beginning of the year and $246,000 at the end of the year. The company's return on assets for the year (round the percent to one decimal) is:
8.5%
Identify the correct principle for each of the following activities using the drop-down list.
A company records the expenses incurred to generate the revenue reported.- Expense recognition principle Revenue is recognized when goods are provided to the customer at the amount expected to be received.- Revenue recognition principle A company reports the details behind financial statements that would impact user's decisions.- Full-disclosure principle Accounting information is based on actual cost.- Measurement principle
Why is accounting important?
Accounting information impacts all of us.
Identify what accounting is by selecting the correct statement.
Accounting is a system that identifies, records and communicates financial information.
Why does a business need accounting information?
Accounting records business transactions and communicates financial information.
Identify the correct definition of an asset.
An asset is a resource that a business owns or controls.
Which of the following correctly depicts the accounting equation?
Assets = Liabilities + Equity
Identify the expanded accounting equation from the options below.
Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses
Which of the following formulas is correct in depicting the expanded accounting equation?
Assets = Liabilities + Owner, Capital - Owner, Withdrawal + Revenues - Expenses
Given the statements below, choose the most accurate definition of owner withdrawals.
Assets an owner takes from the business for personal use
Identify the main sections on a statement of cash flows. (Check all that apply.)
Cash flows from investing activities Cash flows from operating activities Cash flows from financing activities
Identify which items belong on the statement of cash flows.
Cash flows from investing, operating and financing activities
Identify which items belong on the balance sheet.
Cash, accounts receivable, and owner, capital
Sally Smith purchased $100 of supplies for her business and paid immediately. She would record this transaction in the accounting equation by which of the following?
Decrease Cash; increase Supplies.
The definition of expenses includes which of the following statements? (Check all that apply.)
Expenses decrease equity. Expenses are the costs necessary to earn revenue.
Match each item on the left with its correct definition on the right.
Expenses- Decrease equity and are the cost of providing products and services to customers. Revenues-increase equity from sales of products and services to customers. Owner Withdrawals-Decrease equity and are the outflows of assets from the company for the owner's personal use. Owner Investments- Increase equity and are assets an owner puts into the business.
The organization that is primarily responsible for developing GAAP for use by all U.S. companies is the:
FASB
True or false: Return on assets is computed as Net Income divided by Assets.
False
Classify the following business activities using the drop-down list.
Happenings that affect the accounting equation- Events Exchanges of value between two entities- External transactions Exchanges within an entity- Internal transactions
The organization that is responsible for issuing International Financial Reporting Standards is the:
IASB
Which of the following is a proper reflection of the sequence of steps when deciding on the preferred course of action in making an ethical decision?
Identify ethical concerns; Analyze options; Make ethical decision.
The four basic financial statements are:
Income Statement, Statement of owner's equity, Balance sheet, and Statement of cash flows.
Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrate how to record this transaction in the accounting equation.
Increase Cash by $4,000; Increase J. Pickle, Capital by $4,000
Tyler invests $2,000 cash to form a consulting business set up as a proprietorship. This transaction will:
Increase equity by $2,000
Identify the type of activity by choosing the best answer for each question.Select each item listed below as being an identifying, recording, or a communicating activity.
Preparing and entering a list of checks issued- Recording Using a cash register to enter sales- Recording Entering a list of the sales invoices, including the prices and quantities, for the company's record keeping Interpreting information from financial reports- Communicating Preparing financial statements for creditors- Communicating
Identify the correct assumption for each of the following activities using the drop-down list.
Presumes that the business will continue operating in the future.- Going-concern assumption A business is accounted for separately from other business entities and its owner.- Business entity assumption Transactions and events are expressed in units of money.- Monetary unit assumption The life of the company can be divided into specific time periods.- Time period assumption
The recording of transactions and events only, either manually or electronically. An information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities.
Record keeping Accounting
Which of the statement(s) below define(s) an asset? (Check all that apply.)
Resources with future benefits A resource owned Resources controlled by the business
Identify which items belong on the income statement.
Revenue, expenses and net income
The definition of revenues includes which of the following statements? (Check all that apply.)
Revenues increase equity. Revenues are the sales of products or services to customers by a business.
Which of the following statements below lists the rules of entering transactions into the accounting equation?
The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity.
When recording transactions into the accounting equation, which of the following statements are correct? (Check all that apply.)
The accounting equation must always remain in balance. After recording the transaction, total assets will always equal total liabilities plus owner's equity.
On January 31, Jean Consulting Company receives a bill for that month's utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this event have on the company's accounting equation as of January 31?
The business must record this event, which would increase liabilities and decrease equity on January 31.
What are Generally Accepted Accounting Principles?
The concepts and rules that govern financial accounting practice.
Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.
The relation of assets, liabilities and equity is reflected in the equation. The equation applies to all business transactions. The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. The equation states that Assets = Liabilities + Equity.
The correct definition of an income statement includes which of the following?
The statement describes a business's revenues and expenses over a period of time.
Which of the following statements best represents the reason for the accounting equation?
The total of everything owned by a business must always equal the total of what the business owes to creditors and owners.
True or false: Owner withdrawals are resources taken from the business for personal use.
True
Which of the statements correctly represents the accounting equation?
What a business owns will always equal what it owes to creditors and owners.
When supplies are purchased on credit it means that: (Check all that apply.)
a liability has been incurred. the Accounts Payable account will be increased. the business will pay for the supplies at a later time.
A process of analyzing data to identify meaningful relations and trends is called data
analytics
Return on assets measures a company's ability to generate an adequate return on its investment in:
assets
The expanded accounting equation is defined as:______ = Liabilities + Owner's Capital +______ - ______ - ______ Owner's Withdrawals. Do not include "account" or "accounts" in your answer.
assets revenues expenses
Select the correct term for the following types of users:
customers- external purchasing manager- internal marketing manager- internal suppliers-external labor union- external
When using the accounting equation, recording the purchase of equipment for cash would include an increase to the (Cash/Equipment/Supplies) account and a decrease to the (Cash/Equipment/Supplies) account.
equipment cash
Users who do not directly run the organization and have limited access to accounting information are called (internal/external) users.
external
Generally accepted accounting principles (GAAP) wants information to have: Check all that apply.
faithful representation relevance
The return on assets for your small business was 11.2% last year and 12.6% this year. Your return on assets:
improved
The correct definition of revenues is: Revenues (increase/decrease) (liabilities/equity) and are earned from the sale of products and services.
increase equity
Jackson's Catering Services sold cookies to the local college. The college paid immediately. Record this transaction in Jackson's accounting equation by:
increasing Cash; increasing Revenues
Sally Smith decided to start a sea shell business. Her initial investment in the business consisted of $10,000 in cash. Record this transaction in the accounting equation of the new business by:
increasing Cash; increasing S. Smith, Capital.
On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by:
increasing Supplies, and increasing Accounts Payable
Russell's Consulting Services provided $1,000 of services to the local college and immediately collected $700, but the college wants to pay the rest next month. Record this transaction in the accounting equation for Russell's Consulting Service by:
increasing both Cash and Accounts Receivable; and increasing Revenues
Users of accounting information can be divided into two main groups. These groups include:
internal and external
The three sections of the statement of cash flows includes all of the following:
investing operating financing
The accounts payable account is a(n) ______ account.
liability
_____ includes opportunities in general accounting, cost accounting and internal auditing.
managerial accounting
The _____ principle states that accounting information is based on actual cost.
measurement
An employee that has unpaid bills might exhibit the following fraud factor:
pressure
In the fraud triangle, when a person feels an incentive to commit fraud, this is referred to as _______.
pressure
The three factors that must exist for a person to commit fraud include __, __, and __.
pressure opportunity rationalization
The majority of accounting opportunities are in _____ accounting.
private
The _________ recognition principle states that revenue is recognized when goods or services are provided to customers and at an amount expected to be received.
revenue
Define what the income statement reports by completing the following sentence: The income statement describes a company's (assets/revenues) and (expenses/liabilities) along with the resulting net income or loss over a period of time due to earnings related activities.
revenues expenses
To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to (Equipment/Supplies/Cash) and a decrease to (Equipment/Supplies/Cash)
supplies cash
A graphical presentation of data to help in understanding their significance is called data
visualization, data visualization, or visualizations
