The net income of Avid Camera Services is $20,000. The beginning and ending stockholders’ equity balances were $36,000 and $54,000, respectively. The company issued no common stock. Calculate the amount of dividends. A) $12,000 B) $2,000 C) $16,000 D) $15,000 ANSWER B .Stockholders’ Equity Beginning Balance $36,000 Add: Net Income 20,000 Less: Stockholders’ Equity Ending […]
Define assets. Provide three examples of assets. What will be an ideal response ANSWER Assets are economic resources that are expected to benefit the business in the future. Assets are something the business owns or has control of. Examples include cash, merchandise inventory, furniture, and land.
Liabilities represent creditors’ claims on the business’s assets. Indicate whether the statement is true or false ANSWER TRUE
A creditor who has loaned money to a business has a claim to some of the assets of the business until the debt is paid. Indicate whether the statement is true or false ANSWER TRUE
A debt that a business owes is called ________. A) an asset B) a liability C) stockholders’ equity D) revenue ANSWER B
Equity increases when revenues are earned. Indicate whether the statement is true or false ANSWER TRUE
Equity decreases with expenses and revenues. Indicate whether the statement is true or false ANSWER FALSE
The total amount of assets a business possesses may or may not be equal to the total of liabilities and equity of the business. Indicate whether the statement is true or false ANSWER FALSE
Which of the following is the correct accounting equation? A) Assets + Liabilities = Equity B) Assets = Liabilities + Equity C) Assets + Revenues = Equity D) Assets + Revenues = Liabilities + Expenses ANSWER B
Genity Corporation records business transactions in dollars and disregards changes in the value of a dollar over time. Which of the following accounting assumptions does this represent? A) economic entity assumption B) going concern assumption C) accounting period assumption D) monetary unit assumption ANSWER D
