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Exam 1: Accounting in Business

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Question 31

True/False

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A sole proprietorship is a business owned by one or more persons.

A) True
B) False

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Question 32

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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) A) and B)
G) All of the above

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Question 33

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

In the partnership form of business,the owners are called stockholders.

Soo Lin began an Internet Consulting practice and completed these transactions during April of the current year: Show the effects of the above transactions on the accounting equation of Soo Lin,Consultant.Use the following format for your answers.The first item is shown as an example. Increase = I Decrease = D No effect = N

External users of accounting information include all of the following except:

The statement of owner's equity:

Prepare a December 31 balance sheet in proper form for Smokey River Supplies from the following list of the accounts:

Understanding generally accepted accounting principles is not necessary to effectively use and interpret financial statements.

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

The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold.

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

Rent expense appears on which of the following statements?

________________________________ explains changes in the owner's claim on the business's assets from net income or loss,owner investments,and owner withdrawals over a period of time.

U.S.Government Treasury bonds provide low return and low risk to investors.

Every business transaction leaves the accounting equation in balance.

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?

_________________ is net income divided by average total assets.

An accounting information system communicates data to help users make better decisions.

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.