129) Revenues are:
A) The same as net income.
B) The excess of expenses over assets.
C) Resources owned or controlled by a company.
D) The increase in equity from a company’s sales of products and services.
E) The costs of assets or services used.
130) 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.
131) Another name for equity is:
A) Net income.
B) Expenses.
C) Net assets.
D) Revenue.
E) Net loss.
132) When expenses exceed revenues, the result is called:
A) Net assets.
B) Negative equity.
C) Net loss.
D) Net income.
E) A liability.
133) Outflows of cash and other resources to stockholders are:
A) Liabilities.
B) Dividends.
C) Expenses.
D) Stock issuances.
E) Revenues.
134) Distributions of cash or other resources by a business to its stockholders:
A) Reduce assets and equity.
B) Increase assets and equity.
C) Reduce assets and equity (via net income).
D) Reduce retained earnings.
E) Reduce contributed capital.
135) The assets of a company total $700,000; the liabilities, $200,000. What is the amount of
equity?
A) $900,000.
B) $700,000.
C) $500,000.
D) $200,000.
E) It is impossible to determine unless the amount of the stock issuances is known.
136) 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?
A) $49,700.
B) $13,050.
C) $20,500.
D) $31,100.
E) $40,400.
137) On August 31 of the current year, the assets and liabilities of Gladstone, Inc. are as follows:
Cash $30,000; Supplies, $600; Equipment, $10,000; Accounts Payable, $8,500. What is the
amount of stockholders’ equity as of August 31 of the current year?
A) $49,100.
B) $32,100.
C) $12,100.
D) $10,900.
E) $30,900.
138) Assets created by selling goods and services on credit are:
A) Accounts payable.
B) Accounts receivable.
C) Liabilities.
D) Expenses.
E) Equity.
139) An exchange of value between two entities that yields a change in the accounting equation
is called:
A) The accounting equation.
B) Recordkeeping or bookkeeping.
C) An external transaction.
D) An asset.
E) Net Income.
140) 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, $30,000 increase; equity, $30,000 increase.
B) Assets, $30,000 decrease; liabilities, $30,000 decrease.
C) Assets, $30,000 decrease; liabilities, $30,000 increase.
D) Liabilities, $30,000 decrease; equity, $30,000 increase.
E) Assets, $30,000 decrease; equity $30,000 decrease.
141) If 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
142) Alpha Company has assets of $600,000, liabilities of $250,000, and equity of $350,000. It
buys office equipment on credit for $75,000. What would be the effects of this transaction on the
accounting equation?
A) Assets increase by $75,000 and expenses increase by $75,000.
B) Assets increase by $75,000 and expenses decrease by $75,000.
C) Liabilities increase by $75,000 and expenses decrease by $75,000.
D) Assets decrease by $75,000 and expenses decrease by $75,000.
E) Assets increase by $75,000 and liabilities increase by $75,000.
143) Contessa Company collected $42,000 cash on its accounts receivable. The effects of this
transaction as reflected in the accounting equation are:
A) Total assets decrease and equity increases.
B) Both total assets and total liabilities decrease.
C) Total assets, total liabilities, and total equity are unchanged.
D) Both total assets and equity are unchanged and liabilities increase.
E) Total assets increase and equity decreases.
144) If the liabilities of a business increased $75,000 during a period of time and the
stockholders’ equity in the business decreased $30,000 during the same period, the assets of the
business must have:
A) Decreased $105,000.
B) Decreased $45,000.
C) Increased $30,000.
D) Increased $45,000.
E) Increased $105,000.
145) If the assets of a business increased $89,000 during a period of time and its liabilities
increased $67,000 during the same period, equity in the business must have:
A) Increased $22,000.
B) Decreased $22,000.
C) Increased $89,000.
D) Decreased $156,000.
E) Increased $156,000.
146) If the liabilities of a company increased $74,000 during a period of time and equity in the
company decreased $19,000 during the same period, what was the effect on the assets?
A) Assets would have increased $55,000.
B) Assets would have decreased $55,000.
C) Assets would have increased $93,000.
D) Assets would have decreased $93,000.
E) None of the above.
147) If a company paid $38,000 of its accounts payable in cash, what was the effect on the
accounting equation?
A) Assets would decrease $38,000, liabilities would decrease $38,000, and equity would
decrease $38,000.
B) Assets would decrease $38,000, liabilities would decrease $38,000, and equity would increase
$38,000.
C) Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains
unchanged.
D) There would be no effect on the accounts because the accounts are affected by the same
amount.
E) Assets would increase $38,000 and liabilities would decrease $38,000.
148) If assets are $365,000 and equity is $120,000, then liabilities are:
A) $120,000.
B) $245,000.
C) $365,000.
D) $485,000.
E) $610,000.
149) Rushing had net income of $240 million and average total assets of $2,000 million. Its
return on assets is:
A) 12%.
B) 120%.
C) 80%.
D) 8%.
E) 800%.
150) 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%.
151) Speedy has net income of $18,955, and assets at the beginning of the year of $200,000.
Assets at the end of the year total $246,000. Compute its return on assets.
A) 7.7%.
B) 8.5%.
C) 9.5%.
D) 11.8%.
E) 13.0%.
152) Chou Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and
assets at the end of the year are $300,000. Compute its return on assets.
A) 8.4%.
B) 17.2%.
C) 14.3%.
D) 15.6%.
E) 1.5%.
153) U.S. treasury bonds are:
A) High-risk and high-return investments.
B) Low-risk and low-return investments.
C) High-risk and low-return investments.
D) Low-risk and high-return investments.
E) High risk and no-return investments.
154) Risk is:
A) Net income divided by average total assets.
B) The reward for investment.
C) The uncertainty about the return we will earn.
D) Unrelated to return expected.
E) Derived from the idea of getting something back from an investment.
155) The statement of cash flows reports all of the following except:
A) Cash flows from operating activities.
B) Cash flows from investing activities.
C) Cash flows from financing activities.
D) The net increase or decrease in assets for the period reported.
E) The net increase or decrease in cash for the period reported.
156) The basic financial statements include all of the following except:
A) Balance Sheet.
B) Income Statement.
C) Statement of Retained Earnings.
D) Statement of Cash Flows.
E) Statement of Changes in Assets.
157) The statement of retained earnings:
A) Reports changes in equity due to stockholder investments.
B) Reports changes in equity due to net income, net losses and dividends.
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.
158) The financial statement that reports whether the business earned a profit and also lists the
revenues and expenses is called the:
A) Balance sheet.
B) Statement of retained earnings.
C) Statement of cash flows.
D) Income statement.
E) Statement of financial position.
159) A balance sheet lists:
A) The types and amounts of the revenues and expenses of a business.
B) Only the information about what happened to equity during a time period.
C) The types and amounts of assets, liabilities, and equity of a business as of a specific date.
D) The inflows and outflows of cash during the period.
E) The assets and liabilities of a company but not the stockholders’ equity.
160) A financial statement providing information that helps users understand a company’s
financial status, and which lists the types and amounts of assets, liabilities, and equity as of a
specific date, is called a(n):
A) Balance sheet.
B) Income statement.
C) Statement of cash flows.
D) Statement of retained earnings.
E) Financial Status Statement.
161) The financial statement that identifies a company’s cash receipts and cash payments over a
period of time is the:
A) Statement of financial position.
B) Statement of cash flows.
C) Balance sheet.
D) Income statement.
E) Statement of changes in stockholders’ equity.
162) The financial statement that shows the changes in equity that resulted from net income (or
net loss); and dividends to stockholders is the:
A) Statement of financial position.
B) Statement of cash flows.
C) Balance sheet.
D) Income statement.
E) Statement of retained earnings.
163) Cash investments by stockholders are listed on which of the following statements?
A) Statement of retained earnings and income statement.
B) Income statement only.
C) Retained earnings only.
D) Statement of retained earnings and statement of cash flows.
E) Statement of cash flows only.
164) Accounts payable appear on which of the following statements?
A) Balance sheet.
B) Income statement.
C) Statement of retained earnings.
D) Statement of cash flows.
E) Transaction statement.
165) The income statement reports all of the following except:
A) Revenues earned by a business.
B) Expenses incurred by a business.
C) Assets owned by a business.
D) Net income or loss earned by a business.
E) The time period over which the earnings occurred.
166) Use the following information as of December 31 to determine equity.
Cash
$
57,000
Buildings
175,000
Equipment
206,000
Liabilities
141,000
A) $57,000.
B) $141,000.
C) $297,000.
D) $438,000.
E) $579,000.
167) Use the following information for Meeker Corp. to determine the amount of equity to
report.
Cash
$
70,000
Buildings
125,000
Land
205,000
Liabilities
130,000
A) $390,000.
B) $140,000.
C) $20,000.
D) $530,000.
E) $270,000.
168) Determine the net income of a company for which the following information is available
for the month of July.
Employee salaries expense
$
180,000
Interest expense
10,000
Rent expense
20,000
Consulting revenue
400,000
A) $190,000.
B) $210,000.
C) $230,000.
D) $400,000.
E) $610,000.