ACCG: Ch.01

Which of the following statements explain(s) how the accounting equation applies to businesses? (Check all that apply.)

1. 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. 2. The equation applies to all transactions and events. 3. The relation of assets, liabilities and equity is reflected in the equation. 4. The equation states that Assets = Liabilities + Equity.

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.

13,700

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%

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

5,750

Given the list of accounts below, identify which of them would appear on a balance sheet. Cash Supplies Rental Revenue Equipment Retained earnings rent expense utitlity expense accounts payable

Cash Supplies Equipment Retained earnings, 12/31 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.

T or F: Return on assets is computed as Net Income divided by Total Assets.

False

Describe the order in which a company prepares financial statements.

Income statement statement of retained earnings balance sheet

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.

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

Recognition and measurement Objectives Qualitative characteristics Elements

Which of the statement(s) below define(s) an asset? (Check all that apply.)

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

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

Revenues Common Stock Expenses Dividends

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.

What are Generally Accepted Accounting Principles?

The concepts and rules that govern financial accounting practice.

The correct definition of a balance sheet includes which of the following statements?

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

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.

Dividends are resources paid to the stockholders. T or F?

True

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

concepts.

The statement of retained earnings explains changes in equity from net income (or loss) and from any Blank______ over a period of time. (Select the accounts below which will correctly complete this question.) dividends liabilities revenues

dividends

The __ is the first financial statement to be prepared.

income statement

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

Jackson Company purchased office equipment costing $3,000 for his business and paid immediately. Record this transaction in the accounting equation by:

increasing Equipment; decreasing Cash

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __, __, and __. (Check all that apply).

opportunity pressure rationalization

Generally accepted accounting principles (GAAP) wants information to have: (Check all that apply.)

relevance faithful representation