Question 1

Quick Computer Service 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

Return on assets = Net income / Average assetsNet income = Revenues - Expenses = $80,000 - $50,000 = $30,000Average assets = (Beginning assets + Ending assets) / 2 = ($400,000 + $450,000) / 2 = $425,000Return on assets = $30,000 / $425,000 = 7.1%

Question 2

Identify each of the following business activities 1 through 6 into the appropriate category a, b, and c.

Accepted Answer

The answer of Identify each of the following business activities...

Question 3

Match the following definitions with terms 1 through 8. Place the letter that identifies the best definition in the blank space next to the term.

Accepted Answer

The answer of Match the following definitions with terms 1...

Question 4

Della's Donuts owner made investments of $50,000 and withdrawals of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Accepted Answer

Net income is calculated by subtracting expenses from revenues.

Net income = revenues - expenses 
Net income = $83,000 - $64,000 
Net income = $19,000

Investments and withdrawals are not factored into the calculation of net income. Therefore, the correct answer is D, $19,000.

Question 5

Flash reported net income of $17,500 for the past year. At the beginning of the year the company had $200,000 in assets and $50,000 in liabilities. By the end of the year, assets had increased to $300,000 and liabilities were $75,000. Calculate its return on assets:

Accepted Answer

Return on assets (ROA) is calculated by dividing net income by average total assets.

Average total assets = (Beginning total assets + Ending total assets) / 2

= ($200,000 + $300,000) / 2

= $250,000

ROA = Net income / Average total assets

= $17,500 / $250,000

= 0.07

= 7.0%

Therefore, the correct answer is B) 7.0%.

Question 6

Match each of the following items 1 through 5 with the financial statement a through d in which each item would most likely appear. An item may appear on more than one statement.

Accepted Answer

The answer of Match each of the following items 1...

Question 7

A company's balance sheet shows: cash $22,000, accounts receivable $16,000, office equipment $50,000, and accounts payable $17,000. What is the amount of owner's equity?

Accepted Answer

Owner's equity is calculated by subtracting liabilities from assets. Here, assets total $88,000 ($22,000 + $16,000 + $50,000) and liabilities are $17,000, making the owner's equity $71,000 ($88,000 - $17,000).

Question 8

A company borrows $125,000 from the Eastside Bank and receives the loan proceeds in cash. This represents a(n):

Accepted Answer

Borrowing money from a bank is considered a financing activity, as it involves obtaining funds from external sources to finance the company's operations.

Question 9

A company acquires equipment for $75,000 cash. This represents a(n)

Accepted Answer

The acquisition of equipment is considered an investing activity as it involves the purchase of long-term assets that will be used to generate income in the future.

Question 10

Della's Donuts had cash inflows from operating activities of $27,000; cash outflows from investing activities of $22,000, and cash outflows from financing activities of $12,000. Calculate the net increase or decrease in cash.

Accepted Answer

The net cash flow is calculated as $27,000 (inflows from operating) - $22,000 (outflows from investing) - $12,000 (outflows from financing) = -$7,000, indicating a decrease in cash.

Question 11

Flash had cash inflows from operations $62,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

Accepted Answer

The net change in cash is calculated by adding cash inflows from operations ($62,500) and cash inflows from financing ($25,000), then subtracting cash outflows from investing activities ($47,000). This results in a net increase of $40,500 ($62,500 + $25,000 - $47,000).

Question 12

A company reported total equity of $145,000 at the beginning of the year. The company reported $210,000 in revenues and $165,000 in expenses for the year. Liabilities at the end of the year totaled $92,000. What are the total assets of the company at the end of the year?

Accepted Answer

The company's net income is revenues minus expenses, which is $210,000 - $165,000 = $45,000. The ending equity is the beginning equity plus net income, so $145,000 + $45,000 = $190,000. The accounting equation states that Assets = Liabilities + Equity. Therefore, the total assets at the end of the year are $92,000 (liabilities) + $190,000 (equity) = $282,000.

Question 13

Cool Tours had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and withdrawals by owners of $9,000. Calculate the ending equity.

Accepted Answer

The ending equity is calculated as beginning equity + revenues - expenses - withdrawals. So, $72,000 + $90,000 - $65,000 - $9,000 = $88,000.

Question 14

Match each of the following terms with the most appropriate definition.

Accepted Answer

The answer of Match each of the following terms with...

Question 15

Flash has beginning equity of $257,000, net income of $51,000, withdrawals of $40,000 and investments by owners of $6,000. Its ending equity is:

Accepted Answer

Ending equity is calculated as beginning equity plus net income, plus investments by owners, minus withdrawals. So, $257,000 + $51,000 + $6,000 - $40,000 = $274,000.

Question 16

The following is a list of selected users of accounting information. Match the appropriate user to the following information needs.

Accepted Answer

The answer of The following is a list of selected...

Question 17

A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. What is the amount of liabilities?

Accepted Answer

The total assets of the company are $104,000 ($24,000 + $30,000 + $50,000). The accounting equation is Assets = Liabilities + Equity. Therefore, the liabilities are $104,000 (total assets) - $72,000 (equity) = $32,000.

Question 18

Match the following definitions with the terms 1 through 9. Place the letter that identifies the best definition in the blank space next to the term.

Accepted Answer

The answer of Match the following definitions with the terms...

Question 19

Match the following terms with the appropriate definition.

Accepted Answer

The answer of Match the following terms with the appropriate...

Question 20

Rent expense that is paid with cash appears on which of the following statements?

Accepted Answer

Rent expense paid with cash affects the income statement as an expense, reducing net income. It also appears on the statement of cash flows under operating activities, reflecting the cash outflow.

Quiz 1: Accounting in Business