ACCT chp1

Which financial statement is prepared first?

Income Statement

19. Using the following information, calculate the return on assets. Net income for November, 2018 $ 5,000 Total assets, November 1, 2018 76,000 Total assets, November 30, 2018 80,250

Return on assets = Net income / Average total assets =6.4%

Financial accounting

The field of accounting that focuses on providing information for external decision makers.

Managerial Accounting

The field of accounting that focuses on providing information for internal decision makers.

Consider the overall effects on Global Cleaning Service from selling and performing services on account for $6,400 and paying expenses totaling $2,500. What is Global Cleaning Service's net income or net loss? a. Net income of $3,900 b. Net loss of $3,900 c. Net income of $6,400 d. Net income of $8,900

a

Generally Accepted Accounting Principles (GAAP) are currently formulated by the a. Financial Accounting Standards Board (FASB). b. Securities and Exchange Commission (SEC). c. Institute of Management Accountants (IMA). d. American Institute of Certified Public Accountants (AICPA).

a

The balance sheet reports the a. financial position on a specific date. b. results of operations on a specific date. c. financial position for a specific period. d. results of operations for a specific period.

a

Which of the following requires accounting information to be complete, neutral, and free from material error? a. Faithful representation concept b. Cost principle c. Economic entity assumption d. Going concern assumption

a

Going concern assumption

assumes that an entity will remain in operation for the foreseeable future

Monetary unit assumption

assumes that items on the financial statements are recorded in a monetary unit

Assume that Global Cleaning Service performed cleaning services for a department store on account for $180. How would this transaction affect Global Cleaning Service's accounting equation? a. Increase both assets and liabilities by $180 b. Increase both assets and equity by $180 c. Increase both liabilities and equity by $180 d. Decrease liabilities by $180, and increase equity by $180

b

Assume Global Cleaning Service had net income of $570 for the year. Global Cleaning Service's beginning and ending total assets were $4,520 and $4,180, respectively. Calculate Global Cleaning Service's return on assets for the year. a. 12.6% b. 13.6% c. 13.1% d. 7.63%

c

At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning service, had total assets of $3,630 and equity of $2,280. How much were Global Cleaning Service's liabilities? a. $5,910 b. $3,630 c. $1,350 d. $2,280

c

Which of the following characteristics best describes a corporation? a. A business with a single owner b. Is not taxed c. Stockholders not personally liable for entity's debts d. Not a separate taxable entity

c

Which of the following is not an external user of a business's financial information? a. Taxing authorities b. Customers c. Employees d. Investors

c

Which type of business organization is owned by only one owner? a. Corporation b. Partnership c. Sole proprietorship d. Items a, b, and c are all correct.

c

When considering normal account balances, which statement is true? Accounts Payable normally has a debit balance. Retained Earnings normally have a debit balance. Cash normally has a debit balance. Accounts Receivable normally has a credit balance.

cash normally has a debit balance

IASB

creates International Financial Reporting Standards

. Accounting is the information system that a. measures business activities. b. communicates the results to decision makers. c. processes information into reports. d. All of the above.

d

Assuming normal account balances, the following statement is true when balancing a T-account or Ledger? Assets normally have credit balances. Liabilities normally have credit balances. Dividends normally have credit balances. Expenses normally have credit balances.

liabilities normally have credit balances

SEC

oversees the U.S. financial markets

FASB

oversees the creation and governance of accounting standards in the United States

Certified Management Accountants

professionals who work for a single company

Economic entity assumption

requires an organization to be a separate economic unit

Faithful Representation

requires information to be complete, neutral, and free from material error

Cost Principle

states that acquired assets and services should be recorded at their actual cost

GAAP

the main U.S. accounting rule book

Pack Company had the following data: Service Revenue $10,000 Cash $12,000 Accounts Receivable $3,000 Office Supplies $4,000 Rent Expense $2,000 Salaries Expense $1,200 Utilities Expense $800 Accounts Payable $3,200 What is the amount of total Liabilities to report on the Balance Sheet for Pack Company?

3200

Jones Company had net income of $10,000 for the year. Beginning total assets were $150,000 and ending assets were $200,000. What is Jones Company's return on assets (ROA) for the year?

5.7%

Using the expanded accounting equation, solve for the missing amount. Assets $ 71,288 Liabilities 2,260 Common Stock ? Dividends 14,420 Revenues 53,085 Expenses 28,675

59038

Creditor

A person or business to whom a business owes money

Which of the following statements is correct? Accounts Payable increases with a credit entry. Salaries Payable increases with a debit entry. Accounts Payable increases with a debit entry. Salaries Payable decreases with a credit entry.

Accounts payable increases with a credit entry

Smith Decorating Services pays $200 cash for rent expense. How would this transaction affect the accounting equation?

Asset decrease and equity decrease

Williams Travel Service performed travel booking services for a customer on account for $1,200. How would this transaction affect the accounting equation?

Asset increase, Equity increase

Williams Travel Service pays $100 cash for salaries expense. How would this transaction affect the accounting equation?

Assets decrease and equity decreases

Williams Travel Service purchased land for cash. How would this transaction affect the accounting equation?

Assets increase and assets decrease

Williams Travel Service purchased office supplies on account for $300. How would this transaction affect the accounting equation?

Assets increase, liabilities increase

On January 2, Complete Computer Service prepays one year of insurance of $2,400. The journal entry to record this transaction would be:

Prepaid Insurance (d), cash (c)

Certified public Accountants

Professional accountants who serve the general public

Accounting

The information system that measures business activities, processes the information into reports, and communicates the results to decision makers.