Connect Financial Accounting Chapter 1
Q1. Determine the missing amount from each of the separate situations given below.
Q2. Answer the following questions. (Hint: Use the accounting equation.)At the beginning of the year, Addison Company’s assets are
a. $273,000 and its equity is $204,750. During the year, assets increase $80,000 and liabilities increase $46,000. What is the equity at year-end?
b. Office Store has assets equal to $247,000 and liabilities equal to $210,000 at year-end. What is the equity for Office Store at year-end?
c. At the beginning of the year, Quaker Company’s liabilities equal $71,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $6,000 during the year. What are the beginning and ending amounts of equity?
Q3. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,110 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts.
|Accounts receivable||11,500||Consulting revenue||11,500|
|Office supplies||2,400||Rent expense||2,640|
|Office equipment||17,020||Telephone expense||800|
|Accounts payable||7,820||Miscellaneous expenses||620|
Using the above information prepare an October income statement for the business.
Q4. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $82,780 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts.
|Accounts receivable||10,600||Consulting revenue||10,600|
|Office supplies||1,960||Rent expense||2,270|
|Office equipment||16,580||Telephone expense||760|
|Accounts payable||7,250||Miscellaneous expenses||580|
Using the above information prepare an October statement of retained earnings for Ernst Consulting.
Q5. On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,660 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts.
|Accounts receivable||13,800||Consulting revenue||13,800|
|Office supplies||2,990||Rent expense||3,210|
|Office equipment||17,710||Telephone expense||870|
|Accounts payable||8,230||Miscellaneous expenses||680|
Using the above information prepare an October 31 balance sheet for Ernst Consulting.
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:
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?
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
- Business entity assumption
- Revenue recognition principle
Q4. The assets of a company total $700,000; the liabilities, $200,000. What are the net assets?
- 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:
Q6. If equity is $300,000 and liabilities are $192,000, then assets equal:
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:
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.
- Business entity assumption
- Consideration assumption.
Q10. Rushing had income of $150 million and average invested assets of $1,800 million. Its return on assets is:
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