Wild: Accounting Ch 1

Click and drag on elements in order Describe the order in which a company prepares financial statements.

1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cash Flows

Jacob's Chocolates had beginning retained earnings of $4,000; net income of $10,000; and dividends of $300, calculate the ending balance in the retained earnings account.

13,700 Reason: $4,000 beginning balance + $10,000 net income - $300 dividends.

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%

Select all that apply Which of the statement(s) below define(s) an asset? An amount owned Resources controlled by the business An amount owed to the owners Resources with expected future benefits An amount owed to a creditor

An amount owned Resources controlled by the business Resources with expected future benefits

Which of the statement(s) below define(s) an asset?

An amount owned Resources with expected future benefits Resources controlled by the business

Identify the correct definition of an asset:

An asset is a resource that a business owns or controls

Which list of accounts below, identifies only accounts that would appear on a balance sheet.

Common Stock, Equipment, Accounts Payable

Smith Company purchased $100 of supplies for the business and paid cash. Smith Company would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.)

Expenses Dividends Common Stock Revenues

Return on assets is computed as Net Income divided by Total Assets.

False: Reason: Return on assets is computed as Net Income divided by Average Total Assets.

Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation.

Increase Cash by $4,000; Increase Common Stock by $4,000.

An employee that is having trouble paying his personal bills might exhibit the following fraud factor:

Pressure

Sheldon Company had beginning retained earnings of $1,000, net income of $5,000, and dividends of $250. The ending balance in the retained earnings account is

Reason: $1,000 beginning balance + $5,000 net income - $250 dividends = $5,750.

Given that Jacob's Chocolates Company had beginning retained earnings of $4,000; net income during the period of $10,000; and dividends of $300 calculate the ending balance in the retained earnings account.

Reason: $4,000 beginning retained earnings+ $10,000 net income - $300 dividends.

Identify which of the following lists of accounts would belong on the statement of retained earnings.

Retained earnings and Dividends

Given the list of accounts below, identify which of them would appear on a balance sheet. (Check all that apply.)

Supplies Equipment Accounts Payable Cash Retained earnings, 12/31

To record the purchase of supplies for cash in the accounting equation, the company would increase ___________ (Equipment/Supplies/Cash) and decrease _______ (Equipment/Supplies/Cash).

Supplies/Cash

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?

The accounting equation must always remain in balance. After recording the transaction, assets will always equal liabilities plus 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, assets will always equal liabilities plus equity.

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?

The equation applies to all transactions and events. 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 relation of assets, liabilities and equity is reflected in the equation.

All of the following are part of the FASB conceptual framework:

The four broad categories of the conceptual framework include objectives, qualitative characteristics, elements, and recognition and measurement.

The correct definition of a balance sheet includes which of the following statements? (Check all that apply.)

The statement reports assets, liabilities and equity at a point in time. The statement reports the equality of the accounting equation at any point in time. The statement reports the financial position of a company at a point in time.

Which of the following statements best represents 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.

Dividends are resources paid to the stockholders.

True

Identify which of the following statements is correct as to why accounting is important.

We live in an information age whereby accounting information impacts everyone. Reason: Correct. Information is incredibly important, now more than ever because of how quickly businesses can gather and react to data and how that data permeates so many aspects of everyone's life.

A process of analyzing data to identify meaningful relations and trends is called data

analytics

The FASB conceptual framework consists of all of the following except:

concepts Reason: The measurement principle is one of the four general principles. The conceptual framework consists of objectives, qualitative characteristics, elements, and recognition and measurement.

An external user of accounting information

does not directly run the organization

A(n) _____ user of accounting information does not directly run the organization.

external

Generally accepted accounting principles (GAAP) wants information to have:

faithful representation relevance

The __ is the first financial statement to be prepared.

income sheet

Sally Smith decided to start a sea shell business organized as a corporation. Her initial investment in the business consisted of $10,000 in cash in exchange for common stock. Record this transaction in the accounting equation of the new business by:

increasing Cash; increasing Common Stock

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __, __, and __.

pressure opportunity rationalization

A graphical presentation of data to help in understanding their significance is called data

visualization