Chapter 1 Smartbook

Given that Jacob's Chocolates Company had beginning retained earnings of $4,000; net income during the period of $10,000; and dividends of $300 calculate the ending balance in the retained earnings account.

$13,700

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

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

$5,750

What is accounting?

Accounting records business transactions and communicates financial information.

Which of the statement(s) below define(s) an asset? (Check all that apply.)

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

Identify the correct definition of an asset:

An asset is a resource that a business owns or controls

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 the business and paid cash. Smith Company would record this transaction in the accounting equation by which of the following?

Decrease Cash; increase Supplies.

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.

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

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

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

Retained earnings and Dividends

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.

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

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.

Identify which of the following statements is correct as to why accounting is important.

We live in an information age whereby accounting information impacts everyone.

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

accounts payable, supplies, retained earnings, 12/31, cash, equipment

The FASB conceptual framework consists of all of the following except:

concepts

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

data analysis

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

data visualization

An external user of accounting information

does not directly run the organization

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

elements, objectives, recognition and measurement, and qualitative characteristics

Record the purchase of equipment for cash in the accounting equation would include an increase to the _________ (Cash/Equipment/Supplies) account and a decrease to the __________ (Cash/Equipment/Supplies) account.

equipment, cash

Given the accounts below, choose all of the ones that affect equity. (Check all answers that apply.)

expenses, dividends, common stock, revenues

A(n) ________ user of accounting information does not directly run the organization

external

Return on assets is computed as Net Income divided by Total Assets.

false

The __ is the first financial statement to be prepared.

income statement

Click and drag on elements in order Describe the order in which a company prepares financial statements. Instructions

income statement, statement of retained earnings, balance sheet

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

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

increasing Equipment; decreasing Cash

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

pressure

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

pressure, rationalization, opportunity

Generally accepted accounting principles (GAAP) wants information to have:

relevance, faithful representation

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

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

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

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. correct, the equation states that Assets = Liabilities + Equity., the relation of assets, liabilities and equity is reflected in the equation.

Which of the following statements explain(s) how the accounting equation applies to businesses? Check all that apply.

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

Dividends are resources paid to the owners of a corporation.

true

Dividends are resources paid to the stockholders.

true

To record the purchase of supplies for cash in the accounting equation, the company would increase __________ (Equipment/Supplies/Cash) and decrease ___________ (Equipment/Supplies/Cash).

supplies, cash

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, assets will always equal liabilities plus equity.