Login Registrieren

Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 1: Q18RQ. (page 32)

What is the calculation for ROA? Explain what ROA measures

Short Answer

Expert verified

Return on assets is calculated by dividing net income by average total assets. It measures the profitability of the business in using the assets.

Step by step solution

01

Explanation on return on assets

Return on assets is the profitability ratio, which indicates the profit generated by the business in percentage form on the average total assets.

02

Calculation on return on assets

Average total assets are calculated by dividing the sum of beginning total assets and ending total assets by two. The formula for calculating return on assets is as follows:

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Let’s examine a case using Greg’s Tunes and Sal’s Silly Songs. It is now the end of the first year of operations, and the stockholders want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and no dividends were paid. The businesses throw together the data shown on the next page at year-end: $23, 0008, 00035, 00022, 000$ 10,000 6,000 44,000 9,000 Total Assets Common Stock Total Revenues Total Expenses Greg’s Tunes: Sal’s Silly Songs: Total Liabilities Common Stock Total Expenses Net Income To gain information for evaluating the businesses, the stockholders ask you several questions. For each answer, you must show your work to convince the stockholders that you know what you are talking about. Requirements 7. Which business looks better from a financial standpoint?

Briefly describe the two major fields of accounting

Calculating ROA Matured Water Services had net income for the month of October of $50, 880. A s s e t s a s o f t h e b e g i n n i n g a n d e n d o f t h e m o n t h t o t a l e d$ 362,000, and $486,000, respectively. Calculate Matured Water Services' ROA for the month of October

Abby Perry recently opened her own law office on December 1, which she operates as a corporation. The name of the new entity is Abby Perry, Attorney. Perry experienced the following events during the organizing phase of the new business and its first month of operation, December 2018. Some of the events were personal and did not affect the law practice. Others were business transactions and should be accounted for by the business. Dec. 1 Sold personal investment in Nike stock, which she had owned for several years, receiving $30, 000 c a s h . 2 D e p o s i t e d t h e$ 30,000 cash from the sale of the Nike stock in her personal bank account. 3 Deposited $89, 000 c a s h i n a n e w b u s i n e s s b a n k a c c o u n t t i t l e d A b b y P e r r y, A t t o r n e y . T h e b u s i n e s s i s s u e d c o m m o n s t o c k t o P e r r y . 5 P a i d$ 600 cash for ink cartridges for the printer. 7 Purchased computer for the law office, agreeing to pay the account, $8, 000, w i t h i n t h r e e m o n t h s . 9 R e c e i v e d$ 2,900 cash from customers for services rendered. 15 Received bill from The Lawyer for magazine subscription, $300. (U s e M i s c e l l a n e o u s E x p e n s e a c c o u n t .) 23 F i n i s h e d c o u r t h e a r i n g s o n b e h a l f o f a c l i e n t a n d s u b m i t t e d a b i l l f o r l e g a l s e r v i c e s,$ 8,000, on account. 28 Paid bill from The Lawyer. 30 Paid utilities, $900. 31 R e c e i v e d$ 2,800 cash from clients billed on Dec. 23. 31 Cash dividends of $3,000 were paid to stockholders. Requirements 1. Analyze the effects of the preceding events on the accounting equation of Abby Perry, Attorney. Use a format similar to Exhibit 1-6. 2. Prepare the following financial statements: a. Income statement. b. Statement of retained earnings. c. Balance sheet. d. Statement of cash flows.

Canyon Canoe Company is a service-based company that rents canoes for use on local lakes and rivers. Amber and Zack Wilson graduated from college about 10 years ago. They both worked for one of the “Big Four” accounting firms and became CPAs. Because they both love the outdoors, they decided to begin a new business that will combine their love of outdoor activities with their business knowledge. Amber and Zack decide that they will create a new corporation, Canyon Canoe Company, or CCC for short. The business began operations on November 1, 2018. Nov. 1 Received $16, 000 c a s h t o b e g i n t h e c o m p a n y a n d i s s u e d c o m m o n s t o c k t o A m b e r a n d Z a c k . 2 S i g n e d a l e a s e f o r a b u i l d i n g a n d p a i d$ 1,200 for the first month’s rent. 3 Purchased canoes for $4, 800 o n a c c o u n t . 4 P u r c h a s e d o f f i c e s u p p l i e s o n a c c o u n t,$ 750. 7 Earned $1, 400 c a s h f o r r e n t a l o f c a n o e s . 13 P a i d$ 1,500 cash for wages. 15 Paid $50 d i v i d e n d s t o s t o c k h o l d e r s . 16 R e c e i v e d a b i l l f o r$ 150 for utilities. (Use separate payable account.) 20 Received a bill for $175 f o r c e l l p h o n e e x p e n s e s . (U s e s e p a r a t e p a y a b l e a c c o u n t .) 22 R e n t e d c a n o e s t o E a r l y S t a r t D a y c a r e o n a c c o u n t,$ 3,000. 26 Paid $1, 000 o n a c c o u n t r e l a t e d t o t h e N o v e m b e r 3, 2018, p u r c h a s e . 28 R e c e i v e d$ 750 from Early Start Daycare for canoe rental on November 22, 2018. 30 Paid $100 dividends to stockholders. Requirements 3. Prepare the statement of retained earnings for the month ended November 30, 2018.

See all solutions

Recommended explanations on Business Studies Textbooks

Startups

Read Explanation

Managerial Economics

Read Explanation

Organizational Behavior

Read Explanation

Change Management

Read Explanation

Human Resources

Read Explanation

Actuarial Science in Business

Read Explanation

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free