Question 1

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

Accepted Answer

Ending Equity = Beginning Equity + Common Stock + Net Income - Dividends
Ending Equity = $257,000 +$6,000 + $51,000 - $40,000; Ending Equity = $274,000

Question 2

Zippy had cash inflows from operations $60,500; cash outflows from investing activities of $47,000; and cash inflows from financing of $25,000. The net change in cash was:

Accepted Answer

Net Change in Cash = Cash Flows from Operating Activities + Cash Flows from Investing
Activities + Cash Flows from Financing Activities
Net Change in Cash = $60,500 + ($47,000) + $25,000; Net Change in Cash = $38,500

Question 3

Accounts payable appear on which of the following statements?

Accepted Answer

Accounts payable appear on the balance sheet as a current liability, reflecting the amount a company owes to its creditors for goods or services received but not yet paid for.

Question 4

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

Assets = Liabilities + Stockholders'Equity
Assets = $92,000 + (Beginning Equity + Revenues - Expenses)
Assets = $92,000 + ($145,000 + $210,000 - $165,000)
Assets = $92,000 + $190,000; Assets = $282,000

Question 5

Savvy Sightseeing had beginning equity of $72,000; revenues of $90,000, expenses of $65,000, and dividends to stockholders of $9,000. Calculate the ending equity.

Accepted Answer

Ending Equity = Beginning Equity + Revenues - Expenses - Dividends
Ending Equity = $72,000 + $90,000 - $65,000 - $9,000
Ending Equity = $88,000

Question 6

Rent expense appears on which of the following statements?

Accepted Answer

Rent expense is a type of operating expense and appears on the income statement, which shows the revenues and expenses of a company over a period of time.

Question 7

Cragmont has beginning equity of $277,000, net income of $63,000, dividends of $25,000 and no additional investments by stockholders during the period. Its ending equity is:

Accepted Answer

Beginning Equity + Common Stock + Net Income - Dividends = Ending Equity
$277,000 + $0 + $63,000 - $25,000 = $315,000

Question 8

Determine the net income of a company for which the following information is available for the month of September. 
Service revenue.........................	$300,000
Rent expense.............................	   48,000
Utilities expense........................	 3,200
Salaries expense........................	81,000

Accepted Answer

Revenues - Expenses = Net Income
Service Revenue - Rent Expense - Utilities Expense - Salaries Expense
$300,000 - $48,000 - $3,200 - $81,000 = $167,800

Question 9

Rico's Taqueria 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

Net Increase/(Decrease) in Cash = Cash Flows from Operating Activities + Cash Flows
from Investing Activities + Cash Flows from Financing Activities
Net Increase/(Decrease) in Cash = $27,000 + ($22,000) +($12,000)
Net Increase/(Decrease) in Cash = ($7,000)

Question 10

Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

Accepted Answer

Net Income = Revenues - Expenses
Net Income = $83,000 - $64,000; Net Income = $19,000

Question 11

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

Return on Assets = Net Income/Average Assets
Return on Assets = Revenues - Expenses/Average Assets
Return on Assets = ($80,000 - $50,000)/[($400,000 + $450,000)/2]
Return on Assets = $30,000/$425,000 = 0.0705 =7.1%

Question 12

Use the following information as of December 31 to determine equity. Cash…………………… 57,000
Buildings........................ 175,000
Equipment…………….. 206,000
Liabilities……………… $141,000

Accepted Answer

Assets = Liabilities + Stockholders' Equity
Cash + Equipment + Buildings = Liabilities + Stockholders' Equity
$57,000 + $206,000 + $175,000 = $141,000 + Stockholders' Equity
$438,000 = $141,000 + Stockholders' Equity; Stockholders' Equity = $297,000

Question 13

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

Accepted Answer

The acquisition of equipment involves the purchase of a long-term asset, which is considered an investing activity on the statement of cash flows.

Question 14

Flitter 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 = Net Income/Average Assets
Return on Assets =$17,500/[($200,000 + $300,000)/2]
Return on Assets = $17,500/$250,000 = 0.07 = 7.0%

Question 15

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 stockholders' equity?

Accepted Answer

Assets = Liabilities + Stockholders' Equity
Cash + Accounts Receivable + Office Equipment = Accounts Payable + Stockholders' Equity
$22,000 + $16,000 + $50,000 = $17,000 + Stockholders' Equity
$88,000 = $17,000 + Stockholders' Equity; Stockholders' Equity = $71,000

Question 16

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

Accepted Answer

The borrowing of money represents a financing activity since it involves obtaining funds to support the company's operations or investments.

Question 17

The income statement reports all of the following except:

Accepted Answer

The income statement focuses on the revenues earned and expenses incurred by a business during a specific time period, resulting in the calculation of net income or loss. The statement does not report on the assets owned by the business.

Question 18

Use the following information for Meeker Corp to determine the amount of equity to report. Cash…………………… 70,000
Buildings........................ 125,000
Land………………….. 205,000
Liabilities……………… $130,000

Accepted Answer

Assets - Liabilities = Stockholders'Equity
Cash + Equipment + Land - Liabilities = Stockholders' Equity
$70,000 + $125,000 + $205,000 - $130,000 = $270,000

Question 19

Determine the net income of a company for which the following information is available for the month of July. 
Employee salaries expense....	$180,000
Interest expense....................	10,000
Rent expense........................	20,000
Consulting revenue...............	400,000

Accepted Answer

Net Income = Revenues - Expenses
Net Income = Consulting Revenue - Employee Salaries Expense - Interest Expense - Rent Expense
Net Income = $400,000 - $180,000 - $10,000 - $20,000; Net Income = $190,000

Question 20

Doc's Ribhouse had beginning equity of $52,000; net income of $35,000, and Dividends by the company of $12,000. Calculate the ending equity.

Accepted Answer

Ending Equity = Beginning Equity + Net Income - Dividends
Ending Equity = $52,000 + $35,000 - $12,000 = $75,000

Quiz 1: Accounting in Business