Question 1

If equity is $30,000 and liabilities are $73,000, then assets equal

Accepted Answer

The accounting equation is Assets = Liabilities + Equity. 
Given that Equity is $30,000 and Liabilities are $73,000, we can plug in these values into the equation and solve for Assets: 
Assets = Liabilities + Equity
Assets = $73,000 + $30,000
Assets = $103,000
Therefore, the correct answer is A) $103,000.

Question 2

Items such as sales slips, invoices, cheques, purchase orders, and employee earnings records are also called source documents.

Accepted Answer

This statement is true. Source documents are the original records that provide evidence of a transaction or event, and they include items such as sales slips, invoices, cheques, purchase orders, and employee earnings records.

Question 3

Willie's Attic has the following account balances for the dates given:  What would equity be on September 1 and September 30?

Accepted Answer

The answer of Willie's Attic has the following account balances...

Question 4

The purchase of supplies for cash impacts both the investing and financing sides of theaccounting equation.

Accepted Answer

The purchase of supplies for cash only affects the asset side of the accounting equation, as supplies are an asset. It does not impact the investing or financing sides of the equation.

Question 5

The assets of a business total $20,000; the liabilities, $8,000. The claims of the owners are:

Accepted Answer

The claims of the owners can be calculated as Assets - Liabilities = $20,000 - $8,000 = $12,000. Therefore, the correct choice is C.

Question 6

The FastForward Company balance sheet shows cash $5,000, accounts receivable$7,000, office equipment $3,000, and accounts payable $4,000. What is the amount of equity?

Accepted Answer

Equity is calculated as Assets minus Liabilities. The total assets are $5,000 (cash) + $7,000 (accounts receivable) + $3,000 (office equipment) = $15,000. The liabilities are $4,000 (accounts payable). Therefore, equity is $15,000 - $4,000 = $11,000.

Question 7

The rules adopted by the accounting profession as guides in measuring, recording, and reporting the financial affairs and activities of a business are:

Accepted Answer

All of the choices are correct. Generally accepted accounting principles (GAAP) are a set of rules and guidelines that are intended to make information in financial statements relevant and faithfully represented. They include both broad principles and specific rules to provide consistency in financial reporting.

Question 8

If assets are $175,000 and equity is $47,000, then liabilities equal

Accepted Answer

The accounting equation is: Assets = Liabilities + Equity
Therefore, Liabilities = Assets - Equity
Substituting the given values: 
Liabilities = $175,000 - $47,000 = $128,000.
Hence, the answer is choice B.

Question 9

Under which one of the following situations can a company recognize revenue underGenerally Accepted Accounting Principles?

Accepted Answer

Revenue can be recognized when the goods have been delivered or the service has been provided. In this case, the company has shipped the goods, indicating that delivery has been completed and revenue can be recognized.

Question 10

How would the accounting equation of Lenore Turner's consulting business be affectedby the billing of a client for $2,000 for consulting work completed?

Accepted Answer

Billing a client increases accounts receivable and equity because it represents revenue earned.

Question 11

If assets are $144,000 and liabilities are $37,000, then equity equals

Accepted Answer

Equity is equal to assets minus liabilities, so:
Equity = $144,000 - $37,000
Equity = $107,000

Question 12

If a parcel of land is offered for sale at $45,000, is assessed for tax purposes at $20,000, is considered by its purchasers to be worth $36,000, and is purchased for $34,000, theland should be recorded in the purchaser's books at:

Accepted Answer

The land should be recorded at the amount it was purchased for, which is $34,000. This is the most reliable indication of the land's value as it represents the price paid by a willing buyer and willing seller in an arm's length transaction. The assessed value and perceived value are not as reliable indicators of the land's actual value. The offered sale price may be an asking price and not the actual value.

Question 13

Something of value, such as products, services and money, is called a(n)

Accepted Answer

Something of value refers to an economic consideration, which can include products, services, and money. The other options listed relate to specific accounting or business concepts, but do not directly describe the value itself.

Question 14

Reese's Company reported equity of $22,000 on its December 31, 2014 balance sheet.The following information is available for the year ended December 31, 2015:  What are the total assets of Reese's Company at December 31, 2015?

Accepted Answer

The answer of Reese's Company reported equity of $22,000 on...

Question 15

An exchange between two parties of economic consideration such as goods, services, money, or rights to collect money is called:

Accepted Answer

A business transaction involves the exchange of economic consideration between two parties, which can be goods, services, money, or rights to collect money. The other options (audit, accounting equation, bookkeeping, gift) do not necessarily involve the exchange of economic consideration.

Question 16

Joe Bob has prepared the following analysis of September transactions for his business, Joe Bob's Spareribs. Unfortunately, he has lost some information. Calculate the missing information.

Accepted Answer

Based on the information provided, we can calculate the missing information as follows:

- Total revenue for September = $18,000
- Total expenses for September = $12,500
- Gross profit for September = Total revenue - Total expenses = $18,000 - $12,500 = $5,500
- Gross profit margin for September = Gross profit / Total revenue = $5,500 / $18,000 ≈ 0.306 or 30.6%
- Cost of goods sold for September = Total revenue - Gross profit = $18,000 - $5,500 = $12,500

Out of the given choices, only option B has the correct values for these missing pieces of information.

Question 17

Payment of accounts payable decreases both liabilities and assets

Accepted Answer

Payment of accounts payable reduces the liability owed to the creditor, therefore decreasing liabilities. It also reduces the cash balance (an asset) by the amount paid to the creditor, therefore decreasing assets.

Question 18

Which of the following business transactions would increase the equity of ABC Limited?

Accepted Answer

Billing a customer for consulting services provided during the month will increase ABC Limited's revenue and therefore increase equity.

Question 19

Business events do not affect the accounting equation

Accepted Answer

The answer of Business events do not affect the accounting...

Question 20

At the end of its first year of operations, Lockerbie and Role Company has total assetsof $3,000,000 and total liabilities of $1,200,000. The owner originally invested$200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year's net income for Lockerbie and Role Company?

Accepted Answer

The net income can be calculated using the accounting equation: Assets = Liabilities + Owner's Equity. Owner's Equity = Assets - Liabilities = $3,000,000 - $1,200,000 = $1,800,000. Since the owner originally invested $200,000, the net income is $1,800,000 - $200,000 = $1,600,000.

Quiz 1: Accounting in Business