Chapter 1: Q4DQ. (page 29)
Question: What are at least three questions business owners and managers might be able to answer by looking at accounting information?
The three questions are related to the assets owned by the business, the amount owed by the business, and the income earned and expenses incurred by the business.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed \(84,000 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Use this information to prepare an October income statement for the business.
Cash . . . . . . . . . . . . . . . . . . . . . . . \)11,360
Cash dividends . . . . . . . . . . . . . . . . . . . . . . $ 2,000
Accounts receivable . . . . . . . . . . . 14,000
Consulting revenue . . . . . . . . . . . . . . . . . . 14,000
Office supplies . . . . . . . . . . . . . . . 3,250
Rent expense . . . . . . . . . . . . . . . . . . . . . . . 3,550
Land . . . . . . . . . . . . . . . . . . . . . . . . 46,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . 7,000
Office equipment . . . . . . . . . . . . . 18,000
Telephone expense . . . . . . . . . . . . . . . . . . 760
Accounts payable . . . . . . . . . . . . . 8,500
Miscellaneous expenses . . . . . . . . . . . . . . 580
Common stock . . . . . . . . . . . . . . . 84,000
Define return and risk. Discuss the trade-off between them.
BMW Group, one of Europe’s largest manufacturers, reports the following income statement accounts for the year ended December 31, 2015 (euros in millions).
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . € 92,175
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,043
Selling and administrative costs . . . . . . . . . . . . 8,633
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . 3,103
Use this information to prepare BMW’s income statement for the year ended December 31, 2015.
Define (a) assets, (b) liabilities, (c) equity, and (d) net assets.
Define and explain the return on assets.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
