Chapter 1 study set

Determine the net income: Employee salaries expense $180,000 Interest expense $10,000 Rent expense $20,000 Consulting revenue $400,000

$190,000

Zapper has beginning equity of $257,000, net income of $51,000, dividends paid of $40,000 and stockholder investments of $6,000. Its ending total equity as reported on the balance sheet is:

$274,000.

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

$282,000.

Rushing had net income of $240 million and average total assets of $2,000 million. Its return on assets (ROA) is:

12%

The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

Advertising expense for the month was paid in cash.

Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?

Assets decrease $30,000; liabilities decrease $30,000.

If a company receives $12,000 from a stockholder, the effect on the accounting equation would be:

Assets increase $12,000 and equity increases $12,000.

If a company paid $38,000 of its accounts payable in cash, what was the effect on the accounting equation?

Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains unchanged.

If a company has excess space in its building that it rents to another company for $700, what is the effect on the accounting equation during the first month?

Assets would increase $700 and equity would increase $700.

Billington Corporation borrows $80,000 cash from U.S. Bank. How does this transaction affect the accounting equation for Billington?

Assets would increase $80,000 and liabilities would increase $80,000.

A company purchases equipment for $75,000 cash. This represents an:

Investing activity

Net Income:

Is the excess of revenues over expenses.

If Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:

Revenue increases $10,000.

Which of the following decreases equity:

expenses

When expenses exceed revenues, the result is called:

net loss

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

one asset increases $1,300 and another asset decreases $1,300, causing no effect.

Which of the following factors are components of the fraud triangle?

opportunity, pressure, rationalization.

Zippy had cash inflows from operations of $60,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

$38,500 increase.

Chou Company has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets.

15.6% (net income/average assets)

The statement of cash flows reports all of the following:

Cash flows from operating activities. Cash flows from investing activities. Cash flows from financing activities. The net increase or decrease in cash for the period reported.

Accounting is an information and measurement system that does all of the following:

Communicates business activities, Records business activities, Identifies business activities, Helps people make better decisions.

The accounting equation for Long Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

Equipment was purchased on credit.

Which of the following is true regarding ethics?

Ethics are beliefs that separate right from wrong, Good ethics are good business, Accountants face ethical choices as they prepare financial reports, Ethics are accepted standards of good and bad behavior.

A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a:

Financing activity

An example of a financing activity reported on the statement of cash flows is:

Obtaining a long-term loan.