Question 1

The statement of cash flows reports information on:

Accepted Answer

The statement of cash flows reports information on financing activities, such as capital contributions, loans, and issuance or repurchase of stock. It also reports on operating activities and investing activities, but revenue, expenses, equity, and asset activities are not the primary focus of this statement.

Question 2

If the assets of a business increased $15,000 during a period of time and its equity decreased $4,000 during the same period, liabilities in the business must have:

Accepted Answer

The answer of If the assets of a business increased...

Question 3

U.S. government bonds are:

Accepted Answer

U.S. government bonds are considered low-risk because they are backed by the full faith and credit of the U.S. government. However, they are also considered low-return investments because the interest rates on these bonds are typically lower than the rates on other types of investments with higher risk.

Question 4

Compute return on assets given net income of $13,764, beginning assets of $120,000, and ending assets of $176,000.

Accepted Answer

Return on Assets = (Net Income / Average Total Assets) x 100

Average Total Assets = (Beginning Assets + Ending Assets) / 2
                    = ($120,000 + $176,000) / 2
                    = $148,000

Return on Assets = ($13,764 / $148,000) x 100
                 = 9.3%

Question 5

A balance sheet lists:

Accepted Answer

A balance sheet lists the types and amounts of assets, liabilities, and equity of a business as of a specific date. It does not include information about revenues, expenses, or cash flows.

Question 6

Consider the risk of the following investments. Choose the answer that lists the investments in order from highest expected return to lowest expected return.

Accepted Answer

The answer of Consider the risk of the following investments....

Question 7

The financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses is called a(n):

Accepted Answer

The income statement is the financial statement that reports whether the business earned a profit and also lists the types and amounts of the revenues and expenses. The other options listed are not specifically related to reporting earnings or expenses.

Question 8

A corporation purchased a $40,000 delivery truck by paying 4,000 cash and signing a $36,000 note payable. Immediately prior to this transaction the corporation had assets, liabilities, and owners' equity in the amounts of $75,000, $52,000, and $23,000 respectively. What is the total amount of the corporation's assets after this transaction has been recorded?

Accepted Answer

After the transaction, the assets of the corporation will be:

$40,000 delivery truck + $35,000 (remaining portion of the note payable) + $75,000 (original assets) = $150,000

The liabilities will be:

$52,000 (original liabilities) + $1,000 (portion of the note payable due within one year) + $35,000 (portion of the note payable due after one year) = $88,000

The owners' equity will remain the same at $23,000.

Therefore, the total amount of the corporation's assets after this transaction has been recorded is $150,000 - $88,000 + $23,000 = $111,000.

Question 9

The statement of cash flows reports on cash flows for:

Accepted Answer

The statement of cash flows reports on cash flows for operating activities, which includes transactions related to a company's core business operations, such as cash received from customers, payments to suppliers, and expenses related to employee salaries and benefits. It does not report on revenue activities, expense activities, planning activities, or equity activities.

Question 10

Beta Corporation purchased $100,000 worth of land by paying 10,000 cash and signing a $90,000 mortgage. Immediately prior to this transaction the corporation had assets, liabilities, and owners' equity in the amounts of $150,000, $30,000, and $120,000 respectively. What is the total amount of Beta Corporation's assets after this transaction has been recorded?

Accepted Answer

The answer of Beta Corporation purchased $100,000 worth of land...

Question 11

The financial statement that describes where a company's cash came from and how it was spent during the period is the:

Accepted Answer

The statement of cash flows reports the inflows and outflows of cash during a specific period, including operating, investing, and financing activities. The other options do not provide information about cash inflows and outflows.

Question 12

The financial statement that shows beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the:

Accepted Answer

The statement that shows beginning and ending retained earnings balances and the effects of net income (loss) and a dividend for the period is the statement of retained earnings.

Question 13

FastForward has net income of $18,955 and assets at the beginning of the year of $200,000. Its assets at the end of the year total $246,000. Compute its return on assets.

Accepted Answer

The answer of FastForward has net income of $18,955 and...

Question 14

The statement of retained earnings:

Accepted Answer

The statement of retained earnings reports how retained earnings changes over a period of time, typically one year. It shows the beginning balance of retained earnings, the net income or loss for the period, any dividends paid, and the ending balance of retained earnings.

Question 15

If the liabilities of a business increased $75,000 during a period of time and the equity in the business decreased $30,000 during the same period, the assets of the business must have:

Accepted Answer

The answer of If the liabilities of a business increased...

Question 16

A financial statement providing information that helps users understand a company's financial status and lists the types and amounts of assets, liabilities, and equity as of a specific date is called a(n):

Accepted Answer

A balance sheet provides information about a company's financial standing at a specific point in time, listing assets, liabilities, and equity. An income statement shows a company's revenues, expenses, and net income over a period of time. A statement of cash flows shows how cash moved in and out of a company during a period of time. A statement of retained earnings shows changes in a company's retained earnings over a period of time. "Financial status statement" is not a commonly used term for a specific financial statement.

Question 17

Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:

Accepted Answer

The answer of Reebok had income of $150 million and...

Question 18

Return on assets is:

Accepted Answer

Return on assets is computed by dividing net income by average total assets. It is a measure of a company's profitability in relation to its total assets.

Question 19

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

Accepted Answer

The increase in assets ($89,000) minus the increase in liabilities ($67,000) equals an increase in equity of $22,000. Therefore, choice A is the correct answer.

Question 20

Risk is:

Accepted Answer

Risk refers to the uncertainty about the expected return that will be earned from an investment. Choices A, B, D, and E are not accurate definitions of risk.

Quiz 1: Introducing Financial Accounting