Chapter 1 Accounting Notes
Assets and liabilities of a company are $150,000 and $30,000, respectively. Determine owner's equity using the accounting equation. a. $180,000
$120,000
Assets and owner's equity of a company are $150,000 and $30,000, respectively. Determine liabilities using the accounting equation.
$120,000
Equipment with a sales price of $100,000 is purchased at a discount of 10% by Aaron Company. At what value should the equipment be recorded in Aaron Company's records?
$90,000
As of May 31, Mallard Company reported the following on its financial statements: Total assets $300,000 Total liabilities $200,000 Total owner's equity $100,000 Mallard's ratio of liabilities to owner's equity is
2.00
Which of the following does not represent the accounting equation?
Assets + Owner's Equity = Liabilities
Which of the following best represents the accounting equation?
Assets = Liabilities + Owner's Equity
Which of the following forms of business entities generates 90% of business revenues in the United States?
Corporations
The numerator in the calculation of the ratio of liabilities to owner's equity is
Total Liabilities.
The denominator in the calculation of the ratio of liabilities to owner's equity is
Total Owner's Equity.
Four companies and their ratio of liabilities to owner's equity are as follows: Fred Company 0.88 Yabba Company 0.44 Dabba Company 1.22 Doo Company 0.66 To which of the four companies would a supplier be most eager to extend credit?
Yabba Company
Assets of a company may include
cash, inventory, buildings, and equipment.
The business entity concept is important because
it limits economic data in the accounting system to data directly related to the activities of the business.
The ratio of liabilities to owner's equity is a tool used to assess a company's ability to
pay its creditors.
Assets are the
resources owned by the business.
The amounts needed to calculate the ratio of liabilities to owner's equity can be found on
the balance sheet.
All of the following are incorrect as to the rights of creditors regarding a business's assets except:
the rights of creditors come before the rights of stockholders.
Corporations refer to total owner's equity as
total stockholders' equity.
