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Exam 1: Accounting in Business

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Question 81

Multiple Choice

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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:

A) 8.8%
B) 7.0%
C) 5.8%
D) 35.0%
E) 23.3%

F) C) and E)
G) B) and D)

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Question 82

Multiple Choice

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A resource that the stockholder receives from the company is called a(n) :

A) Liability.
B) Dividend.
C) Expense.
D) Common stock.
E) Investment.

F) B) and E)
G) A) and B)

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Question 83

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What is the balance sheet? What is its purpose?

The purchase of supplies appears on the statement of cash flows as an investing activity because it involves the purchase of assets.

Internal operating activities include research and development, distribution, and human resources.

Investing activities involve the buying and selling of assets such as land and equipment that are held for long-term use in the business.

A net loss occurs when revenues exceed expenses.

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:

Identify several opportunities in accounting and distinguish between private accounting and public accounting.

Bookkeeping is the recording of transactions and events and is only part of accounting.

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

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

__________________ is an information and measurement system that identifies, records and communicates relevant, reliable and comparable information about an organization's economic activities.

A disadvantage of a sole proprietorship is the fact that the owner has ______________.

The statement of cash flows identifies cash flows separated into operating, investing, and financing activities over a period of time.

On December 15 of the current year, Conrad Accounting Services signed a $40,000 contract with a client to provide bookkeeping services to the client in the following year. Which accounting principle would require Conrad Accounting Services to record the bookkeeping revenue in the following year and not the year the cash was received?

If the liabilities of a company increased $92,000 during a period of time and equity in the business decreased $30,000 during the same period, did the assets of the company increase or decrease? By what amount?

There are three major types of business activities. ________________ activities involve the acquisition and disposal of resources that an organization uses to acquire and sell its products or services.

Describe the three types of activities reported on the statement of cash flows.

The three common forms of business ownership include sole proprietorship, partnership, and non-profit.