ACCT201 Ch1.
An employee that is having trouble paying his personal bills might exhibit the following fraud factor:
Pressure
A graphical presentation of data to help in understanding their significance is called data
visualization
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) *100)= 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 Retained Earnings plus Net income - Dividends
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, total assets will always equal total liabilities plus equity.
Identify the correct definition of an asset:
An asset is a resource that a business owns or controls
True or false: Return on assets is computed as Net Income divided by Total Assets.
False 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.
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
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
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
The three factors that must exist for a person to commit fraud include
opportunity pressure rationalization
Generally accepted accounting principles (GAAP) wants information to have:
relevance faithful representation
Given the list of accounts below, identify which of them would appear on a balance sheet.
Accounts Payable Supplies Cash Equipment Retained earnings, 12/31
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 equation. -The equation states that Assets = Liabilities + Equity. -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.
Describe the order in which a company prepares financial statements.
1. Income Statement 2. Statement of Retained Earnings 3. Balance Sheet 4. Statement of Cashflows
Why does a business need accounting information?
Accounting records business transactions and communicates financial information.
Which list of accounts below, identifies only accounts that would appear on a balance sheet.
Common Stock, Equipment, Accounts Payable
The FASB conceptual framework consists of all of the following except:
Concepts
Given the accounts below, choose all of the ones that affect equity.
DO: -Revenues -Common Stock -Expenses -Dividends DON'T: -Cash -Accounts Payable -Notes Payable
Which of the statement(s) below define(s) an asset?
DO: Resources controlled by the business An amount owned Resources with expected future benefits DO NOT: An amount owed to the owners (this is equity) An amount owed to a creditor (liability)
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.
All of the following are part of the FASB conceptual framework:
Objectives Recognition and measurement Elements Qualitative characteristics
Given the statements below, choose the most accurate definition of dividends.
Outflows of cash or other assets paid to the owners of a corporation
What are Generally Accepted Accounting Principles?
The concepts and rules that govern financial accounting practice.
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.
True or false: Dividends are resources paid to the stockholders.
True
: Production managers, who are internal users,
use internal information to help monitor costs and ensure quality.
