6. Shareholders’ equity equals Assets minus Liabilities. True/False 7. Accumulated depreciation and accrued liabilities are examples...

6. Shareholders’ equity equals Assets minus Liabilities. True/False

7. Accumulated depreciation and accrued liabilities are examples of contra accounts: True/False

8. Current assets include cash and other assets expected to be used within the greater of one year or one operating

cycle of the business: True/False

9. Changes in accounting estimates are accounted for retrospectively. True/ False

10. Indicate the natural / normal balance of each account as Debit (DR) or Credit (CR) or Not Applicable (NA)
__ Cash
__ Sales
__ Inventory
__ Accrued expenses
__ Deferred revenue
__ Interest expense
__ Vendor relations expense
__ Retained earnings
__ Prepaid expenses
__ Income taxes
__ Gains from investments
__ Cash flows from operations

Solutions

Expert Solution

6. Shareholders’ equity equals Assets minus Liabilities. True/False
TRUE. Because Assets = Liabilities + Stockholder’s equity.

7. Accumulated depreciation and accrued liabilities are examples of contra accounts: True/False
FALSE.
Accumulated Depreciation is a contra asset account, but accrued liabilities are simply liabilities account.

8. Current assets include cash and other assets expected to be used within the greater of one year or one operating cycle of the business: True/False
TRUE.

9. Changes in accounting estimates are accounted for retrospectively. True/ False
FALSE. The changes in estimates are recorded prospectively as per accounting standards.

10. Indicate the natural / normal balance of each account as Debit (DR) or Credit (CR) or Not Applicable (NA)
__ Cash – Debit (DR)
__ Sales -Credits (CR)
__ Inventory – Debit (DR)
__ Accrued expenses – Debit (DR)
__ Deferred revenue -Credits (CR)
__ Interest expense – Debit (DR)
__ Vendor relations expense – Debit (DR)
__ Retained earnings -Credits (CR)
__ Prepaid expenses – Debit (DR)
__ Income taxes – Debit (DR)
__ Gains from investments -Credits (CR)
__ Cash flows from operations – Not Applicable (NA)

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1.The fundamental rule of the balance sheet is assets equals liabilities plus owners’ equity. True False...

1.The fundamental rule of the balance sheet is assets equals liabilities plus owners’ equity. True False 2.Owners’ equity are the things a business owns, such as cash, inventory, and money owed from customers. True False 3.The cumulative profits of the business since inception are known as retained earnings. True False 4.Assets and liabilities on a balance sheet are always presented at current market value. True False 5.The main sections of a balance sheet are: Assets, liabilities, and net profits Assets,...

1. Shareholders’ wealth can be defined as ______ total assets minus total liabilities. The current stock...

1. Shareholders’ wealth can be defined as ______ total assets minus total liabilities. The current stock price times the number of outstanding shares. fixed assets minus long-term debt minus net working capital. the residual value of a corporation after taxes have been paid. 2. The average tax rate is defined as the ______ initial tax rate which applies when a firm first earns taxable income. total tax paid divided by the total taxable income. highest tax rate listed on the...

Shareholders are personally liable for debts of the corporation. True False An example of equity financing...

Shareholders are personally liable for debts of the corporation. True False An example of equity financing is when a corporation borrows money from a bank. True False A benefit of owning common stock is Shareholders may receive dividends. Shareholders have the right to vote. Shareholders have residual claims to assets. All of the above. The journal entry to record the issuance of common stock above par value includes A credit to Cash. A debit to Common Stock. A credit to...

Determining how Assets, Liabilities, Shareholders Equity, Revenue, Expense, and Net Income are understated, overstated, or not...

Determining how Assets, Liabilities, Shareholders Equity, Revenue, Expense, and Net Income are understated, overstated, or not affected by a company's action. Example: 1. A company did not record a sale made on account for services that have been provided. 2. The amount of cash a customer paid for a sale previously made on credit was understated. 3. The value of inventory purchased on account was understated. 4. Our company recently purchased inventory. The purchase of the inventory was recorded correctly;...

True or False? Corporations 1_____ Shareholders’ equity for a corporation consists of contributed capital and retained...

True or False? Corporations 1_____ Shareholders’ equity for a corporation consists of contributed capital and retained earnings. 2_____ The owner of a corporation is called a director. 3_____ The payment of business profits to the owners of a corporate business is known as drawings. 4_____ A dividend is a distribution of retained earnings. 5_____ The shareholders provide all of the financing for a corporation 6_____ One of the advantages of investing in preferred shares is that you will always be...

Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance...

Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance sheet Cash $ 150,000 Debt $ 0 Other assets 950,000 Equity 1,100,000 Value of firm $ 1,100,000 Value of firm $ 1,100,000 Shares outstanding = 100,000 Price per share = $1,100,000 / 100,000 = $11 Pocket needs to hold on to $52,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.10 per share and to replace cash...

Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance...

Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance sheet Cash $ 150,000 Debt $ 0 Other assets 950,000 Equity 1,100,000 Value of firm $ 1,100,000 Value of firm $ 1,100,000 Shares outstanding = 100,000 Price per share = $1,100,000 / 100,000 = $11 Pocket needs to hold on to $84,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.30 per share and to replace cash...

True or False 1. The debt ratio is computed by dividing total liabilities by current assets....

True or False 1. The debt ratio is computed by dividing total liabilities by current assets. 2. Working capital is the excess of current assets over current liabilities. 3. From a creditor's point of view, the lower the debt ratio; the safer the creditor's position. 4. The trend in ratios is usually more useful than looking at a single year's ratio.

Accounting equation: Assets= Liabilities + Equity 1. Is the Accounting Equation, by definition, true for any...

Accounting equation: Assets= Liabilities + Equity 1. Is the Accounting Equation, by definition, true for any business entity? Do you envision any circumstances under which this equation would ever become imbalanced? Which element of this equation would be responsible for that occurrence?

Total asset cost plus depreciation expense equals book value. Select one: a. TRUE b. FALSE

Subjects