Financial Accounting Quiz

What is the primary goal of financial accounting?

• To provide insights for internal management decisions.

• To supply financial data to external parties.

• To analyze economic trends and customer behavior.

• To assess the profitability of products and services.

Who among the following is not considered an external stakeholder in accounting?

• Creditors.

• Investors.

• Government officials.

• Chief financial officer (CFO).

A business is evaluating the purchase of a building that the seller originally bought for $200,000. The building is currently listed for $350,000, but the buyer believes its value is $340,000, and it is ultimately purchased for $330,000. At what amount should the building be recorded in the buyer's financial records?

• $330,000.

• $335,000.

• $340,000.

• $350,000.

Smith Corporation reported a net income of $200 million and average total assets of $2,500 million. What is its return on assets (ROA)?

• 8.0%.

• 80.0%.

• 12.5%.

• 20.0%.

If the total assets are $450,000 and the total liabilities are $275,000, what is the equity?

• $175,000.

• $275,000.

• $450,000.

• $725,000.

If a business spends $2,000 of its cash to buy equipment, what is the impact on the accounting equation?

• Assets increase $2,000 and liabilities decrease $2,000.

• One asset increases $2,000 and another asset decreases $2,000, causing no effect.

• Assets decrease $2,000 and equity increases $2,000.

• Assets increase $2,000 and liabilities increase $2,000.

On March 31, a company’s records show the following selected accounts and amounts. Use this information to compute net income for the company. Cash $60,000 Accounts receivable 30,000 Office supplies 8,000 Office equipment 50,000 Land 100,000 Accounts payable 25,000 Consulting revenue $70,000 Salaries expense 15,000 Rent expense 20,000 Utilities expense 2,000 Miscellaneous expenses 1,500

• $31,500.

• $32,500.

• $33,500.

• $34,500.

Unearned revenues are:

• Revenues that have been earned but not yet collected in cash.

• Liabilities recorded when customers pay in advance for products or services.

• Recorded as an asset in the accounting records.

• Increases to equity.

Sunshine Cleaning Services received $45,000 on July 1 for a 9-month cleaning contract. How should Sunshine record this transaction in their general journal?

• Debit to Service Revenue for $45,000.

• Credit to Cash for $45,000.

• Credit to Unearned Revenue for $45,000.

• Debit to Accounts Payable for $45,000.

Anderson Corporation has total assets of $500 million. Its total liabilities are $125 million. Its equity is $375 million. Calculate the debt ratio. Note: Round your answer to 1 decimal place.

• 25.0%.

• 20.0%.

• 30.0%.

• 15.0%.