Question 1

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 2

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

An income statement reports the revenues, expenses, and net income (or loss) earned by a business during a period of time, usually a month or year. It summarizes the profitability of the business by subtracting the total expenses from the total revenues to arrive at the net income (or loss) for the period. It is also known as a profit and loss statement or P&L statement.

Question 3

The statement of retained earnings:

Accepted Answer

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

Question 4

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 5

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

Accepted Answer

A balance sheet is a financial statement that provides information about a company's financial status by listing its assets, liabilities, and equity as of a specific date. This statement helps users understand the company's financial position and its ability to meet its financial obligations. The other options, such as the income statement, statement of cash flows, and statement of retained earnings, provide information about a company's financial performance over a period of time, but do not provide a snapshot of its financial status at a specific date. The option of "Financial status statement" is not a commonly used term in accounting and finance.

Question 6

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

Accepted Answer

The statement that describes where a company's cash came from and where it went during the period is the statement of cash flows. The statement of financial position (A) is another name for the balance sheet (C), which shows a company's assets, liabilities, and equity at a specific point in time. The income statement (D) shows a company's revenues and expenses over a period of time, but doesn't explicitly show where cash was received or spent. The statement of retained earnings (E) shows how a company's net income or loss affects its retained earnings balance, but doesn't show cash flows.

Question 7

The income statement reports all of the following except:

Accepted Answer

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

Question 8

Nike had income of $350 million and average assets of $2,000 million. Its return on assets is:

Accepted Answer

Return on assets (ROA) = Net Income / Average Total Assets
ROA = $350 million / $2,000 million = 0.175 or 17.5%

Question 9

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 10

Return on assets is:

Accepted Answer

Return on assets is computed by dividing net income by the average total assets, which is computed by adding beginning assets to ending assets and dividing by two. This ratio is used to evaluate a company's profitability and efficiency in generating profits with the assets they have. Therefore, option B is the correct answer.

Question 11

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 12

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, cash inflows/outflows, or solely retained earnings.

Question 13

The statement of cash flows reports on cash flows for:

Accepted Answer

The statement of cash flows reports on cash flows from operating activities, investing activities, and financing activities. It does not report on revenue activities, expense activities, planning activities, or equity activities specifically.

Question 14

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, along with the effect of net income (loss) and dividends for the period, is the statement of retained earnings. This statement is used to reconcile the beginning and ending balances of a company's retained earnings account, which can be found on the balance sheet. The income statement shows revenue, expenses, and net income (loss) for a period, while the statement of financial position and balance sheet are alternative names for the same statement, which shows a company's assets, liabilities, and equity at a specific point in time. The statement of cash flows shows the sources and uses of cash during a period.

Question 15

U.S. government bonds are:

Accepted Answer

U.S. government bonds are considered low-risk investments because they are backed by the full faith and credit of the U.S. government. This means that the chance of default is extremely low, making them a safe investment. However, they also typically offer lower returns compared to higher-risk investments such as stocks.

Question 16

A company purchases supplies on account, what is the effect on the accounting equation?

Accepted Answer

The answer of A company purchases supplies on account, what...

Question 17

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 (ROA) = Net income / average total assets
Average total assets = (Beginning assets + Ending assets) / 2
Average total assets = ($120,000 + $176,000) / 2 = $148,000
ROA = $13,764 / $148,000 = 0.093 or 9.3%
Therefore, the correct answer is option C).

Question 18

Fast-Forward 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 Fast-Forward has net income of $18,955 and...

Question 19

Cash investments by owners in exchange for stock are listed on which of the following statements?

Accepted Answer

The answer of Cash investments by owners in exchange for...

Question 20

Risk is:

Accepted Answer

Risk refers to the uncertainty or variability surrounding the expected return of an investment. It is not the same as the reward (or potential return) of an investment, and is unrelated to the formula provided in choice A. Choice B is only part of the picture, as risk must also be considered. Choice D is incorrect, because risk does affect expected return. Choice E is not a clear enough definition of risk.

Quiz 1: Introducing Accounting in Business