ACCT 211 Ch 1

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.

$5 million/[($100 million + $120 million/)2] = 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

$5750

Given the list of accounts below, identify which of them would appear on a balance sheet.

Accounts Payable, Cash, Equipment, Retained earnings, 12/31, Supplies

When recording transactions into the accounting equation, which of the following statements are correct?

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

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

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.

True or false: Return on assets is computed as Net Income divided by Total Assets.

False

Which of the following statements represent(s) how expenses affect equity?

If expenses increase, then total equity decreases; Higher expenses result in lower total equity.

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

Which of the following statements are true regarding the effect of revenues on the equity of a business?

Revenues cause equity to increase; Revenues that increase equity have many forms, such as consulting services and commissions from services.

Given the accounts below, choose all of the ones that affect equity.

Revenues, Dividends, Expenses and Common Stock

On 6/25, supplies costing $1,000 were purchased on credit, but only $400 of this amount was paid on 6/25. The remainder of the bill is owed on account. To record this transaction on 6/25: Supplies would be increased by _______; cash would be decreased by ___________, and accounts payable would be increased by ___________.

Supplies increased $1000 Cash decreased $400 Accounts payable increased $600

To record the purchase of supplies for cash, the correct entry into the accounting equation would include an increase to ________ and a decrease to _________.

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.

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

analytics/analysis

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

decreasing Cash; increasing Equipment

The statement of retained earnings explains changes in equity from net income (or loss) and from any ______ over a period of time.

dividends

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 and relevance

The _____ is the first financial statement to be prepared.

income statement

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

opportunity, rationalization, pressure/incentive

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

pressure

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

Which of the following statements is correct regarding revenues?

Revenues cause equity to increase.

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 her business and paid immediately. She would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

Which of the following statements describes the effect of expenses on equity?

Expenses cause equity to decrease

Define accounting

It identifies, records, and communicates business transactions or communicates financial information

How is return on assets computed?

Net Income divided by Average Total Assets.

Given the statements below, choose the most accurate definition of dividends.

Outflows of cash or other assets paid to the owners of a corporation

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

Recognition and measurement, Elements, Qualitative characteristics, Objectives

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

Resources with expected future benefits, resources controlled by the business, an amount owned

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

Retained earnings and Dividends

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

Which of the following statements explain(s) how the accounting equation applies to businesses?

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

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 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: Dividends are resources paid to the owners of a corporation/stockholders

True

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

On 8/1, supplies costing $500 were purchased on credit. Record this transaction in the accounting equation by:

increasing Supplies, and increasing Accounts Payable

The accounts payable account is a(n) ______ account.

liability

The FASB conceptual framework consists of

objectives, qualitative characteristics, elements, recognition and measurement

When supplies are purchased on credit it means that:

the business will pay for the supplies at a later time; the Accounts Payable account will be increased; a liability has been incurred.

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

visualization