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.
Cash | $ | 14,550 | Cash dividends | $ | 1,120 | |
Accounts receivable | 11,500 | Consulting revenue | 11,500 | |||
Office supplies | 2,400 | Rent expense | 2,640 | |||
Land | 45,860 | Salaries expense | 5,920 | |||
Office equipment | 17,020 | Telephone expense | 800 | |||
Accounts payable | 7,820 | Miscellaneous expenses | 620 | |||
Common Stock | 83,110 | |||||
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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.
Cash | $ | 15,760 | Cash dividends | $ | 640 | |
Accounts receivable | 10,600 | Consulting revenue | 10,600 | |||
Office supplies | 1,960 | Rent expense | 2,270 | |||
Land | 46,030 | Salaries expense | 5,450 | |||
Office equipment | 16,580 | Telephone expense | 760 | |||
Accounts payable | 7,250 | Miscellaneous expenses | 580 | |||
Common Stock | 82,780 | |||||
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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.
Cash | $ | 12,040 | Cash dividends | $ | 1,760 | |
Accounts receivable | 13,800 | Consulting revenue | 13,800 | |||
Office supplies | 2,990 | Rent expense | 3,210 | |||
Land | 45,940 | Salaries expense | 6,690 | |||
Office equipment | 17,710 | Telephone expense | 870 | |||
Accounts payable | 8,230 | Miscellaneous expenses | 680 | |||
Common Stock | 83,660 |
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:
- $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
- Business entity assumption
- 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.
- 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:
- 8.3%
- 83.3%
- 12%
- 120%
- 16.7%
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