general Accounting questions
Assets created by selling goods and services on credit are:
Accounts payable.
Accounts receivable.
Liabilities.
Expenses.
Equity.
Accounts receivable.
Which of the following is not classified as a liability?
Accounts Receivable.
Notes Payable.
Wages Payable.
Accounts Payable.
Taxes Payable.
Accounts Receivable.
A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This represents a(n):
Revenue activity.
Operating activity.
Expense activity.
Investing activity.
Financing activity.
Financing activity.
Rent expense appears on which of the following statements?
Balance sheet.
Income statement.
Statement of owner's equity.
Income statement and balance sheet.
Statement of cash flows and balance sheet.
Income statement.
Determine the net income of a company for which the following information is available for the month of September.
Service revenue 312,000
Rent expense 54,000
Utilities expense 3,800
Salaries expense 87,000
a-$275,200. b-$456,800.
c-$171,000. d-$167,200.
e-$258,000.
d-$167,200.
Revenues − Expenses = Net Income
Service Revenue − Rent Expense − Utilities Expense − Salaries Expense
$312,000 − $54,000 − $3,800 − $87,000 = $167,200
The accounting concept that requires every business to be accounted for separately from other business entities, including its owner or owners is known as the:
Time-period assumption.
Business entity assumption.
Going-concern assumption.
Revenue recognition principle.
Measurement (Cost) principle.
Business entity assumption.
Which of the following accounts is not included in the calculation of net income?
Services revenue.
Wages expense.
Rent expense.
Cash.
Rent revenue.
Cash.
Billington Corp borrows $80,000 cash from U.S. Bank. How does this transaction affect the accounting equation for Billington?
Assets would decrease $80,000 and liabilities would decrease $80,000.
Assets would decrease $80,000 and equity would increase $80,000.
Assets would increase $80,000 and equity would decrease $80,000.
Assets would increase $80,000 and liabilities would increase $80,000.
Liabilities would decrease $80,000 and equity would increase $80,000.
Assets would increase $80,000 and liabilities would increase $80,000.
If a company uses $1,610 of its cash to purchase supplies, the effect on the accounting equation would be:
a-Assets increase $1,610 and liabilities decrease $1,610.
b-One asset increases $1,610 and another asset decreases $1,610, causing no effect.
c-Assets decrease $1,610 and equity decreases $1,610.
d-Assets decrease $1,610 and equity increases $1,610.
e-Assets increase $1,610 and liabilities increase $1,610.
b-One asset increases $1,610 and another asset decreases $1,610, causing no effect.
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?
a-$104,000. b-$76,000.
c-$32,000. d-$68,000.
e-$176,000.
c-$32,000.
Assets − Equity = Liabilities
Cash + Accounts Receivable + Equipment − Equity = Liabilities
$24,000 + $30,000 + $50,000 − $72,000 = $32,000
Which of the following is an external user of accounting information?
Purchasing manager.
Human resource manager.
Lender.
Chief executive officer (CEO).
Marketing manager.
Lender.
The statement of owner's equity:
a-Reports how equity changes at a point in time.
b-Reports how equity changes over a period of time.
c-Reports on cash flows for operating, financing, and investing activities over a period of time.
d-Reports on cash flows for operating, financing, and investing activities at a point in time.
e-Reports on amounts for assets, liabilities, and equity at a point in time.
b-Reports how equity changes over a period of time.
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?
a-Cash was received from providing services to a customer.
b-The company paid an amount due on credit.
c-Equipment was purchased for cash.
d-A utility bill was received for the current month, to be paid in the following month.
e-Advertising expense for the month was paid in cash.
e-Advertising expense for the month was paid in cash.
f Houston Company billed a client for $10,000 of consulting work completed, the accounts receivable asset increases by $10,000 and:
a-Accounts payable decreases $10,000.
b-Accounts payable increases $10,000.
c-Cash increases $10,000.
d-Revenue increases $10,000.
e-Revenue decreases $10,000.
d-Revenue increases $10,000.
Use the following information for Meeker Corporation to determine the amount of equity to report.
Cash 65,000 Buildings 122,500
Land 202,500 Liabilities 127,500
a-$517,500. b-$272,500.
c-$390,000. d-$17,500.
e-$262,500.
e-$262,500.
Assets – Liabilities = Owner’s Equity
Cash + Buildings + Land – Liabilities = Owner’s Equity
$65,000 + $122,500 + $202,500 – $127,500 = $262,500
Which of the following is a not an asset account?
Accounts Receivable.
Supplies.
Equipment.
Accounts Payable.
Land.
Accounts Payable.
The accounting principle that requires accounting information to be based on actual cost and requires assets and services to be recorded initially at the cash or cash-equivalent amount given in exchange, is the:
a-Accounting equation.
b-Measurement (Cost) principle.
c-Going-concern assumption.
d-Cost-benefit constraint.
e-Business entity assumption.
b-Measurement (Cost) principle.
Which of the following combinations results in a net loss reported on the income statement?
a-Total revenues of $80,000 and total expenses of $74,000.
b-Total revenues of $70,000 and total expenses of $74,000.
c-Total revenues of $60,000 and total expenses of $52,000.
d-Total revenues of $20,000 and total expenses of $16,000.
e-Total revenues of $40,000 and total expenses of $31,000.
b-Total revenues of $70,000 and total expenses of $74,000.
When expenses exceed revenues, the result is called:
Net assets.
Negative equity.
Net loss.
Net income.
A liability.
Net loss.
If assets are $319,000 and liabilities are $190,000, then equity equals:
a-$129,000. b-$190,000.
c-$319,000. d-$509,000.
e-$828,000.
a-$129,000.
Assets = Liabilities + Owner’s Equity
Equity = $319,000 − $190,000 = $129,000.
The difference between a company's assets and its liabilities, or net assets is:
Net income.
Expense.
Equity.
Revenue.
Net loss.
Equity.
The going concern assumption:
a-Means that accounting information presumes that the business will continue operating instead of being closed or sold.
b-Means that we can express transactions and events in monetary, or money, units.
c-Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.
d-Means that a business is accounted for separately from other business entities, including its owner.
e-Prescribes that a company record the expenses it incurred to generate the revenue reported.
a-Means that accounting information presumes that the business will continue operating instead of being closed or sold.
Saddleback Company paid off $30,000 of its accounts payable in cash. What would be the effects of this transaction on the accounting equation?
a-Assets increase $30,000; equity increases $30,000.
b-Assets decrease $30,000; liabilities decrease $30,000.
c-Assets decrease $30,000; liabilities increase $30,000.
d-Liabilities decrease $30,000; equity increases $30,000.
e-Assets decrease $30,000; equity decreases $30,000.
b-Assets decrease $30,000; liabilities decrease $30,000.
Assets = Liabilities + Owner's Equity
Assets would decrease by $30,000 in Cash due to the payment of the accounts payable.
Liabilities would also decrease by $30,000 in Accounts Payable due to the payment of an obligation. There is no effect on Owner's Equity.
Cage Company had net income of $160 million and average total assets of $2,000 million. Its return on assets (ROA) is:
a-80%. b-0.8%.
c-8%. d-12.5%.
e-125%.
c-8%
Return on Assets = Net Income/Average Total Assets
Return on Assets = $160 million/$2,000 million = 0.08 = 8%
If assets are $99,000 and liabilities are $32,000, then equity equals:
a-$32,000. b-$67,000.
c-$99,000. d-$131,000.
e-$198,000.
b-$67,000.
Assets = Liabilities + Owner's Equity
$99,000 = $32,000 + Owner's Equity; Owner's Equity = $67,000