Question 1

Return on assets is also known as return on investment.

Accepted Answer

A) True 
 B)False

Question 2

Zapper has beginning equity of $257,000,net income of $51,000,dividends of $40,000 and stockholder investments of $6,000.Its ending equity is:

Accepted Answer

A)  $223,000. 
B)  $240,000. 
C)  $268,000. 
D)  $274,000. 
E)  $208,000.

Question 3

Match the following terms with the appropriate definition.
-Time period assumption

Accepted Answer

A) The governmental agency that has the legal authority to establish accounting rules. 
B) Prescribes that assets and services to be recorded initially on a cash or equal-to-cash basis. 
C) A report that describes a company's financial position at a point in time. 
D) A financial statement that reports the changes in equity over the reporting period; including increases from net income and decreases from dividends or net losses. 
E) The concepts and rules that govern financial accounting.
F)A report that identifies cash receipts and cash payments over a period of time.
G)A principle that requires the information in financial statements to be supported by independent unbiased evidence.
H)An independent group consisting of individuals from many countries that identify preferred accounting practices.
I)Presumes that the life of a company can be divided into periods for reporting purposes.
J)Prescribes that a company report the details behind financial statements that would impact user decisions.

Question 4

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information.
-Assess whether an organization is likely to repay its loans with interest.

Accepted Answer

A) Purchasing Managers 
B) Lenders 
C) Suppliers 
D) Regulators 
E) Shareholders

Question 5

Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.

Accepted Answer

A)  7.1%. 
B)  7.5%. 
C)  6.7%. 
D)  20.0%. 
E)  18.8%.

Question 6

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

Accepted Answer

A)  Statement of financial position. 
B)  Statement of cash flows. 
C)  Balance sheet. 
D)  Income statement. 
E)  Statement of retained earnings.

Question 7

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information.
-Judge the soundness of a customer before making sales on credit.

Accepted Answer

A) Purchasing Managers 
B) Lenders 
C) Suppliers 
D) Regulators 
E) Shareholders

Question 8

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

Accepted Answer

A)  Assets would decrease $1,750 and liabilities would decrease $1,750. 
B)  One asset would increase $1,750 and a different asset would decrease $1,750, causing no net change in the accounting equation. 
C)  Assets would increase $1,750 and equity would increase $1,750. 
D)  Assets would increase $1,750 and liabilities would increase $1,750. 
E)  Liabilities would decrease $1,750 and equity would increase $1,750.

Question 9

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000,expenses of $65,000,and dividends to stockholders of $9,000.There were no stockholder investments during the year.Calculate ending equity.

Accepted Answer

A)  $88,000. 
B)  $25,000. 
C)  $97,000. 
D)  $38,000. 
E)  $47,000.

Question 10

The assumption that requires that a business be accounted for separately from its owners is the ________ assumption.

Accepted Answer

The answer of The assumption that requires that a business...

Question 11

Define risk and return and discuss the relation between them.

Accepted Answer

The answer of Define risk and return and discuss the...

Question 12

Which of the following accounts is not included in the asset section of the balance sheet?

Accepted Answer

A)  Cash. 
B)  Accounts receivable. 
C)  Supplies. 
D)  Land. 
E)  Services revenue.

Question 13

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

Accepted Answer

A) True 
 B)False

Question 14

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Accepted Answer

A) True 
 B)False

Question 15

Liabilities are owner claims on assets.

Accepted Answer

A) True 
 B)False

Question 16

The accountant of Action Adventure Games prepared a balance sheet after every 10 day period.The only resources invested by its sole stockholder were at the start of the company on June 1.During June,the first month of operation,the following balance sheets were prepared:
  $\quad $ $\quad $ $\quad $$\begin{array}{c}
  \text {  ACTION ADVENTURE GAMES} &\
 \text { Balance Sheet } &\
 \text {  June 10} &
\end{array}$
$\quad\quad\quad\quad\text { Assets}\quad\quad\quad\quad\quad\quad\text { Equity}$
$\begin{array}{|l|c|l|r|}
\hline \text { Cash } & \$ 60,000& \text { Common stock. } & \$ 60,000 \
\hline && \text { Total liabilities and } & \
\text { Total assets.. }&\$60,000&\text { equity }&\$60,000\
\hline
\end{array}$
 
 $\begin{array}{c}
 \text {ACTION ADVENTURE GAMES}\
 \text {Balance Sheet}\
 \text {June 20}\
\begin{array}{|l|c|l|l|}
\hline \text { Assets } && \text { Liabilities } & \
\hline \text { Cash. } & \$ 48,000& \text { Notes payable. } & \$ 18,000 \
\hline \text { Land. } &10,000& \text { Equity } & \
\hline \text { Building. } & 20,000 &\text { Common stock. } & 60,000 \
\hline&&\text { Total liabilities and } \
 \text { Total assets } & \$ 78,000& \text { equity } &\$78,000 \
\hline
\end{array}\end{array}$  
 $\begin{array}{c}
\text {ACTION ADVENTURE GAMES}\
\text {Balance Sheet}\
\text {June 30}\
\begin{array}{|l|c|l|l|}
\hline \text { Assets } & &\text { Liabilities } & \
\hline \text { Cash. } & \$ 51,000 &\text { Accounts payable. } & \$ 2,000 \
\hline \text { Office supplies. } &2,000& \text { Notes payable. } & 18,000 \
\hline \text { Land. } &10,000& \text { Equity } & \
\hline \text { Building. } & 20,000&\text {  Common stock. } & 60,000 \
\hline && \text { Retained earnings } & 3,000 \
\hline&&\text { Total liabilities and } \
 \text {Total asset } &\$ 83,000 &\text { equity }&\$83,000 \
\hline
\end{array}\end{array}$
  
Required: Describe the nature of each of the four transactions that took place between the balance sheet dates shown.Assume only one transaction affected each account.

Accepted Answer

The answer of The accountant of Action Adventure Games prepared...

Question 17

Match the following activities with the appropriate section of the statement of cash flows.
-Cash received from a one-time sale of used office equipment.

Accepted Answer

A) Financing activity 
B) Investing activity 
C) Operating activity

Question 18

Internal users include lenders,shareholders,brokers and nonexecutive employees.

Accepted Answer

A) True 
 B)False

Question 19

Match the following terms with the appropriate definition.
-Persons using accounting information who are directly involved in managing and operating the organization.

Accepted Answer

A) Internal users 
B) Fraud triangle 
C) Managerial accounting 
D) Ethics 
E) External users
F)Certified Public Accountant (CP
A) 
G)Financial accounting
H)Accounting
I)Recordkeeping

Question 20

Match the following terms with the appropriate definition.
-A model that asserts the factors that must exist for a person to commit fraud.

Accepted Answer

A) Internal users 
B) Fraud triangle 
C) Managerial accounting 
D) Ethics 
E) External users
F)Certified Public Accountant (CP
A) 
G)Financial accounting
H)Accounting
I)Recordkeeping

Exam 1: Accounting in Business

Return on assets is also known as return on investment.

Zapper has beginning equity of $257,000,net income of $51,000,dividends of $40,000 and stockholder investments of $6,000.Its ending equity is:

Match the following terms with the appropriate definition. -Time period assumption

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information. -Assess whether an organization is likely to repay its loans with interest.

Dawson Electronic Services had revenues of $80,000 and expenses of $50,000 for the year.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

The following is a list of selected users of accounting information. Match the appropriate user to the following decisions they make with accounting information. -Judge the soundness of a customer before making sales on credit.

Atkins Company collected $1,750 as payment for the amount owed by a customer from services provided the prior month on credit.How does this transaction affect the accounting equation for Atkins?

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000,expenses of $65,000,and dividends to stockholders of $9,000.There were no stockholder investments during the year.Calculate ending equity.

The assumption that requires that a business be accounted for separately from its owners is the ________ assumption.

Define risk and return and discuss the relation between them.

Which of the following accounts is not included in the asset section of the balance sheet?

Arrow's net income of $117 million and average assets of $1,400 million results in a return on assets of 8.36%.

Investing activities are the acquiring and disposing of resources that an organization uses to acquire and sell its products or services.

Liabilities are owner claims on assets.

Match the following activities with the appropriate section of the statement of cash flows. -Cash received from a one-time sale of used office equipment.

Internal users include lenders,shareholders,brokers and nonexecutive employees.

Match the following terms with the appropriate definition. -Persons using accounting information who are directly involved in managing and operating the organization.

Match the following terms with the appropriate definition. -A model that asserts the factors that must exist for a person to commit fraud.