146)
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 increases $10,000.
B)
Revenue decreases $10,000
C)
Accounts payable decreases $10,000.
D)
Cash increases $10,000.
E)
Revenue increases $10,000.
147)
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 liabilities increase by $75,000.
B)
Liabilities increase by $75,000 and expenses decrease by $75,000.
C)
Assets increase by $75,000 and expenses decrease by $75,000.
D)
Assets increase by $75,000 and expenses increase by $75,000.
E)
Assets decrease by $75,000 and expenses decrease by $75,000.
148)
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 increase and equity decreases.
B)
Total assets decrease and equity increases.
C)
Total assets, total liabilities, and total equity are unchanged.
D)
Both total assets and equity are unchanged and liabilities increase.
E)
Both total assets and total liabilities decrease.
149)
If the liabilities of a business increased $75,000 during a period of time and the owner’s 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 $105,000.
D)
Increased $45,000.
E)
Increased $30,000.
150)
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)
Decreased $156,000.
B)
Increased $89,000.
C)
Decreased $22,000.
D)
Increased $22,000.
E)
Increased $156,000.
151)
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)
None of the above.
B)
Assets would have decreased $19,000.
C)
Assets would have increased $55,000.
D)
Assets would have decreased $55,000.
E)
Assets would have increased $19,000.
152)
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
increase $38,000.
B)
Assets would decrease $38,000, liabilities would decrease $38,000, and equity remains
unchanged.
C)
Assets would increase $38,000 and liabilities would decrease $38,000.
D)
There would be no effect on the accounts because the accounts are affected by the same
amount.
E)
Assets would decrease $38,000, liabilities would decrease $38,000, and equity would
decrease $38,000.
153)
If assets are $365,000 and equity is $120,000, then liabilities are:
A) $365,000. B) $245,000. C) $610,000. D) $120,000. E) $485,000.
154)
Rushing had income of $150 million and average invested assets of $1,800 million. Its return on
assets is:
A) 120%. B) 83.3%. C) 16.7%. D) 8.3%. E) 12%.
155)
Cage Company had income of $350 million and average invested assets of $2,000 million. Its
return on assets (ROA) is:
A) 3.5%. B) 17.5%. C) 35%. D) 1.8%. E) 5.7%.
156)
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) 13.0%. C) 8.5%. D) 9.5%. E) 11.8%.
157)
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) 1.5%. C) 17.2%. D) 14.3%. E) 15.6%.
158)
U.S. government bonds are:
A)
Low-risk and high-return investments.
B)
High-risk and high-return investments.
C)
Low-risk and low-return investments.
D)
High risk and no-return investments.
E)
High-risk and low-return investments.
159)
Risk is:
A)
Derived from the idea of getting something back from an investment.
B)
The reward for investment.
C)
The uncertainty about the return expected to be earned.
D)
Unrelated to return expected.
E)
Net income divided by average total assets.
160)
The statement of cash flows reports all of the following except:
A)
Cash flows from investing activities.
B)
Cash flows from operating activities.
C)
The net increase or decrease in assets for the period reported.
D)
Cash flows from financing activities.
E)
The net increase or decrease in cash for the period reported.
161)
The basic financial statements include all of the following except:
A)
Income Statement.
B)
Statement of Owner’s Equity.
C)
Statement of Cash Flows.
D)
Statement of Changes in Assets.
E)
Balance Sheet.
162)
The statement of owner’s equity:
A)
Reports how equity changes over a period of time.
B)
Reports on cash flows for operating, financing, and investing activities at a point in time.
C)
Reports on cash flows for operating, financing, and investing activities over a period of time.
D)
Reports on amounts for assets, liabilities, and equity at a point in time.
E)
Reports how equity changes at a point in time.
163)
The financial statement that reports whether the business earned a profit and also lists the revenues
and expenses is called the:
A)
Statement of cash flows.
B)
Statement of financial position.
C)
Balance sheet.
D)
Income statement.
E)
Statement of owner’s equity.
164)
A balance sheet lists:
A)
The inflows and outflows of cash during the period.
B)
The types and amounts of assets, liabilities, and equity of a business as of a specific date.
C)
Only the information about what happened to equity during a time period.
D)
The assets and liabilities of a company but not the owner’s equity.
E)
The types and amounts of the revenues and expenses of a business.
165)
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)
Statement of owner’s equity.
B)
Financial Status Statement.
C)
Balance sheet.
D)
Income statement.
E)
Statement of cash flows.
166)
The financial statement that identifies a company’s cash receipts and cash payments over a period
of time is the:
A)
Balance sheet.
B)
Statement of cash flows.
C)
Statement of financial position.
D)
Statement of changes in owner’s equity.
E)
Income statement.
167)
The financial statement that shows the beginning balance of owner’s equity; the changes in equity
that resulted from new investments by the owner, net income (or net loss); withdrawals; and the
ending balance, is the:
A)
Statement of financial position.
B)
Statement of cash flows.
C)
Balance sheet.
D)
Statement of owner’s equity.
E)
Income statement.
168)
Cash investments by owners are listed on which of the following statements?
A)
Statement of owner’s equity only.
B)
Statement of cash flows only.
C)
Balance sheet.
D)
Income statement.
E)
Statement of owner’s equity and statement of cash flows.
75
169)
Accounts payable appear on which of the following statements?
A)
Balance sheet.
B)
Statement of cash flows.
C)
Transaction statement.
D)
Statement of owner’s equity.
E)
Income statement.
170)
The income statement reports all of the following except:
A)
Net income or loss earned by a business.
B)
The time period over which the earnings occurred.
C)
Expenses incurred by a business.
D)
Revenues earned by a business.
E)
Assets owned by a business.
171)
Use the following information as of December 31 to determine equity.
Cash
$ 57,000
Buildings
175,000
Equipment
206,000
Liabilities
141,000
A) $141,000. B) $579,000. C) $297,000. D) $438,000. E) $57,000.
172)
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) $530,000. B) $140,000. C) $20,000. D) $270,000. E) $390,000.
173)
Determine the net income of a company for which the following information is available for the
month of July.
$180,000
10,000
20,000
400,000
A) $400,000. B) $230,000. C) $210,000. D) $610,000. E) $190,000.
174)
Determine the net income of a company for which the following information is available for the
month of September.
Service revenue
$300,000
Rent expense
48,000
Utilities expense
3,200
Salaries expense
81,000
A) $171,000. B) $252,000. C) $167,800. D) $263,800. E) $432,200.
80
175)
A company acquires equipment for $75,000 cash. This represents a(n):
A)
Financing activity.
B)
Revenue activity.
C)
Expense activity.
D)
Operating activity.
E)
Investing activity.
176)
A company borrows $125,000 from the Northern Bank and receives the loan proceeds in cash. This
represents a(n):
A)
Operating activity.
B)
Financing activity.
C)
Investing activity.
D)
Revenue activity.
E)
Expense activity.
177)
Zippy had cash inflows from operations $60,500; cash outflows from investing activities of
$47,000; and cash inflows from financing of $25,000. The net change in cash was:
A)
$132,000 increase.
B)
$132,500 decrease.
C)
$38,500 decrease.
D)
$11,500 decrease.