# Connect Financial Accounting Chapter 1 Quiz

Q1. 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:

• \$365,000
• \$239,000
• \$189,000
• \$315,000
• \$277,000

Q2. 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?

• \$104,000
• \$76,000
• \$32,000
• \$68,000
• \$176,000

Q3. The Superior Company acquired a building for \$500,000. The building was appraised at a value of \$575,000. The seller had paid \$300,000 for the building 6 years ago. Which accounting principle would require Superior to record the building on its records at \$500,000?

• Monetary unit assumption
• Going-concern assumption
• Measurement (cost) principle
• Revenue recognition principle

Q4. The assets of a company total \$700,000; the liabilities, \$200,000. What are the net assets?

• \$900,000
• \$700,000
• \$500,000
• \$200,000
• It is impossible to determine unless the amount of stockholder investment is known

Q5. Cage Company had income of \$350 million and average invested assets of \$2,000 million. Its return on assets (ROA) is:

• 1.8%
• 35%
• 17.5%
• 5.7%
• 3.5%

Q6. If equity is \$300,000 and liabilities are \$192,000, then assets equal:

• \$108,000
• \$192,000
• \$300,000
• \$492,000
• \$792,000

Q7. The accounting equation for Ying Company shows a decrease in its assets and a decrease in its equity. Which of the following transactions could have caused that effect?

• Cash was received from providing services to a customer.
• The company paid an amount due on credit.
• Equipment was purchased for cash.
• A utility bill was received for the current month, to be paid in the following month.
• Advertising expense for the month was paid in cash.

Q8. If assets are \$99,000 and liabilities are \$32,000, then equity equals:

• \$32,000
• \$67,000
• \$99,000
• \$131,000
• \$198,000

Q9. Which of the following accounting principles prescribes that a company record its expenses incurred to generate the revenue reported?

• Going-concern assumption.
• Expense recognition (Matching) principle.
• Measurement (Cost) principle.