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Exam 1: Accounting in Business

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Question 131

True/False

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Return on assets reflects a company's ability to generate profit through productive use of its assets.

A) True
B) False

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Question 132

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A corporation is:

A) A business legally separate from its owners.
B) Controlled by the FASB.
C) Not responsible for its own acts and own debts.
D) The same as a limited liability partnership.
E) Not subject to double taxation.

F) B) and D)
G) A) and B)

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Question 133

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_________________ is net income divided by average total assets.

Assets created by selling goods and services on credit are:

On May 31 of the current year, the assets and liabilities of Riser, Inc. are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, $650; Equipment, $12,000; Accounts Payable, $9,300. What is the amount of stockholders' equity as of May 31 of the current year?

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.

The financial statement that identifies a company's cash receipts and cash payments over a period of time is the:

If the assets of a company increase by $55,000 during the year and its liabilities increase by $25,000 during the same year, then the change in equity of the company during the year must have been:

The rule that (1) requires revenue to be recognized at the time it is earned, (2) allows the inflow of assets associated with revenue to be in a form other than cash, and (3) measures the amount of revenue as the cash plus the cash equivalent value of any noncash assets received from customers in exchange for goods or services, is called the:

An external transaction is an exchange within an entity that may or may not affect the accounting equation.

Resources a company owns or controls that are expected to yield future benefits are:

The accounting equation can be restated as: Assets - Equity = Liabilities.

All of the following are true regarding ethics except:

Identify the three basic forms of business organizations and their key attributes.

Classify the following the appropriate section of the statement of cash flows with activities according.

Return on assets is useful to decision makers for evaluating management, analyzing and forecasting profits, and in planning activities.

Revenues are increases in equity from a company's sales of products and services to customers.

Prepare a December 31 balance sheet in proper form for Cane Property Management, Inc. using the following accounts and amounts: $\begin{array}{llcc} \text { Commissions earned..................} &\$40,000\\ \text {Accounts payable...................... } &3,500\\ \text { Accounts receivable................. } &5,000\\ \text {Stockholders' equity................. } &104,500\\ \text {Office equipment..................... } &10,000\\ \text { Advertising expense...............} &3,200\\ \text { Cash...................................... } &7,500\\ \text { Land...................................... } &35,000\\ \text { Note payable.......................... } &50,000\\ \text {Office supplies......................... } &1,500\\ \text { Salaries expense...................... } &12,000\\ \text { Salaries payable...................... } &1,000\\ \text { Building.................................. } &100,000\\\end{array}$

The ______________ assumption assumes business will continue operating indefinitely instead of being closed or sold.