Question

11. Dawson Electronic Services had revenues of $98,000 and expenses of $59,000 for the year. Its assets at the beginning of the year were $409,000. At the end of the year assets were worth $459,000. Calculate its return on assets.

10. The going concern assumption:

A. Means that accounting information reflects a presumption that the business will continue operating instead of being closed of sold.

B. Means that we can express transactions and events in monetary, or money, units.

C. Presumes that the life of a company can be divided into time periods, such as months and years, and that useful reports can be prepared for those periods.

D. Means that a business is accounted for separately from other business entities, including its owners.

E. Prescribes that a company record the expenses it incurred to generate the revenue reported.

Answer 1

11. Return on Assets = Net Income/Average Assets

Net Income = revenue – expenses

=$98,000-$59,000

= $39,000

Average Assets = (409,000+459,000)/2

= $434,000

Hence, Return on Assets = 39,000/434,000

= 8.99% (approx.)

10. The going concern assumption:

A. Means that accounting information reflects a presumption that the business will continue operating instead of being closed of sold.

Going concern assumptions means to assume that business will continue for a foreseeable period of time in future.