135. Viscount Company collected $42,000 cash on its accounts receivable. How does this transaction affect the company's accounting equation?
A. Assets decrease and equity increases
B. Both assets and liabilities decrease
C. Assets, liabilities and equity are unchanged
D. Both assets and equity are unchanged and liabilities increase
E. Assets increase and equity decreases
136. If the liabilities of a business increased $75,000 during a period of time and the 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
Change in Assets = Change in Liabilities + Change in Equity
Change in Assets = $75,000 + (-$30,000) = + $45,000
137. 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
Change in Assets = Change in Liabilities + Change in Equity
Change in Assets = + $89,000 - $67,000 = + $22,000
138. If the assets of a business increased $15,000 during a period of time and its equity decreased $46,000 during the same period, liabilities in the business must have:
A. Increased $11,000
B. Decreased $11,000
C. Increased $19,000
D. Decreased $19,000
E. Increased $61,000
Change in Assets = Change in (Liabilities + Equity)
+ 15,000 = x -4,000
x = + 19,000
139. Beta Corporation purchased $100,000 worth of land by paying 10,000 cash and signing a $90,000 mortgage. Immediately prior to this transaction the corporation had assets, liabilities and owners' equity in the amounts of $150,000; $30,000; and $120,000 respectively. What is the total amount of Beta Corporation's assets after this transaction has been recorded?
A. $240,000
B. $250,000
C. $160,000
D. $40,000
E. $260,000
150,000 (assets prior to transaction) + 100,000 (land) - (10,000) cash = 240,000
140. A corporation purchased a $40,000 delivery truck by paying 4,000 cash and signing a $36,000 note payable. Immediately prior to this transaction the corporation had assets, liabilities and owners' equity in the amounts of $75,000; $52,000; and $23,000 respectively. What is the total amount of the corporation's assets after this transaction has been recorded?
A. $115,000
B. $111,000
C. $79,000
D. $71,000
E. $75,000
75,000 (assets prior to transaction) + 40,000 (truck) - 4,000 (cash) = 111,000
141. Return on assets is:
A. Also called rate of return
B. Computed by dividing net income by beginning assets plus ending assets divided by two
C. Computed by multiplying net income by total assets
D. Used in helping evaluate expenses
E. Found on the balance sheet
142. Reebok had income of $150 million and average assets of $1,800 million. Its return on assets is:
A. 8.33%
B. 83.3%
C. 12.0%
D. 120%
E. 16.7%
$150 million/$1,800 million = 8.33%
143. Nike had income of $350 million and average assets of $2,000 million. Its return on assets is:
A. 1.8%
B. 35%
C. 17.5%
D. 5.7%
E. 3.5%
$350 million/$2,000 million = 17.5%
144. Fast-Forward has net income of $18,955 and assets at the beginning of the year of $200,000. Its 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%
$18,955/[($200,000 + $246,000)/2] = $18,955/$223,000 = 8.5%