Chapter 1. practice questions for exam

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. Multiple choice question. 4.5% 45.4% 4.1% 5%

4.5%

Identify the expanded accounting equation from the options below. Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses Assets + Liabilities = Owner's Capital + Revenues - Expenses - Owner's Withdrawals Assets = Liabilities - Owner's Capital + Revenues - Expenses - Owner's Withdrawals

Assets = Liabilities + Owner's Capital - Owner's Withdrawals + Revenues - Expenses

The expanded accounting equation is defined as:_______________ = Liabilities + Owner's Capital + ________________- __________________- Owner's Withdrawals. Do not include "account" or "accounts" in your answer.

Blank 1: Assets Blank 2: Revenues or Revenue Blank 3: Expenses or Expense

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.

Blank 1: Equipment Blank 2: Cash

Bob's Bakery is making a partial payment of $70 for baking supplies it purchased in a previous month. Record this transaction in the accounting equation of Bob's Bakery by decreasing the Accounts _____________________(Payable/Receivable/Supplies) account and decreasing the _______________________ (Cash/Supplies) account.

Blank 1: Payable Blank 2: Cash

ABC Co. performs $200 of services for a customer, but does not get paid right away. Demonstrate how ABC Co. would record this transaction in the accounting equation by completing the following sentence. Note: enter one answer for each blank. ABC Co. would increase the Accounts (Payable/Receivable) ________________________account and increase the (Cash/Revenue) ______________________________account in the accounting equation.

Blank 1: Receivable Blank 2: Revenue

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)._____________________.

Blank 1: Supplies Blank 2: Cash

A (proprietorship/partnership/corporation)__________________ is a business entity that has one owner and has unlimited liability.

Blank 1: proprietorship

The four major types of transactions that affect equity in a business are ____________________ ,_____________ , owner's withdrawals, and owner's investments. Note: enter one word for each blank. Do not use the word "account" or "accounts" in your answer.

Blank 1: revenues, revenue, or revenue earned Blank 2: expenses or expense

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? -Increase Supplies; increase Revenues. -Increase Cash; increase Supplies. -Increase Cash; increase Expenses. -Decrease Cash; increase Supplies.

Decrease Cash; increase Supplies.

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? - Increase Supplies; increase Revenues. - Decrease Cash; increase Supplies. - Increase Cash; increase Supplies. - Increase Cash; increase Expenses.

Decrease Cash; increase Supplies. Reason: Cash is decreased.

The SEC has delegated the task of standard setting to: -Public companies -FASB -IRS -U.S. Stock Exchange

FASB

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

False

Given the accounts below, choose all that affect equity. (Check all answers that apply.) -Mortgage Payable -Cash -Accounts Payable -Revenues -Owner's Investments -Owner's Withdrawals -Owner's Capital -Expenses

Revenues Owner's Investments Owner's Withdrawals Owner's Capital Expenses

Which organization has the legal authority to create Generally Accepted Accounting Principles? - FDIC -FDA -SEC -IRS

SEC

During September, Sally's Hair Salon purchased $900 of supplies on account. In October, Sally's wants to make a payment of $200 on this bill. Record the October transaction into Sally's accounting equation by: (Check all that apply.) -decreasing Cash, $200. - increasing Supplies, $900. -decreasing Accounts Receivable, $200. - decreasing Accounts Payable, $200. -increasing Supplies, $200.

decreasing Cash, $200. decreasing Accounts Payable, $200.

On May 1, Mary's Morsels provided catering services at a wedding. The bride is billed $4,000 and will pay during the following month. Record this transaction on May 1 in the accounting equation of Mary's Morsels by: -increasing Cash and increasing Revenue increasing Accounts Payable and increasing Revenue increasing Accounts Receivable and decreasing Revenue increasing Accounts Receivable and increasing Revenue

increasing Accounts Receivable and increasing Revenue

On May 1, Mary's Morsels provided catering services at a wedding. The bride is billed $4,000 and will pay during the following month. Record this transaction on May 1 in the accounting equation of Mary's Morsels by: - increasing Accounts Receivable and decreasing Revenue - increasing Accounts Payable and increasing Revenue - increasing Cash and increasing Revenue - increasing Accounts Receivable and increasing Revenue

increasing Accounts Receivable and increasing Revenue