Which of the following statements about stockholders' equity is not correct? Group of answer choices a)Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. b)Stockholders' equity accounts are increased with credits. c)Stockholders' equity results only from contributions of the

Which of the following statements about stockholders' equity is not correct? Group of answer choices a)Stockholders' equity is the shareholders' residual interest in the company resulting from the difference in assets and liabilities. b)Stockholders' equity accounts are increased with credits. c)Stockholders' equity results only from contributions of the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assets are a.always lower than liabilities b.equal to liabilities less stockholders' equity c.the same as expenses because they are acquired with cash d.financed by the stockholders and/or creditors
Explain why stockholders’ equity is increased by revenuesand decreased by expenses.
2. The amount of owners' equity in a business is not affected by: a) The percentage of total assets held in cash. b) Investments made in the business by the owner. c) The profitability of the business. d) The amount of dividends paid to stockholders.
I. Directions: Write TRUE if the statement is correct; write FALSE if the statement is wrong. Write your answer on the space provided af ter each number. _1. Equity funding involves repayment. _2. The primary disadvantage of equity funding is that the firm's owners relinquish part of their ownership interest and may lose some control. _3. Return on equity depends on company's earnings. _4. Debt financing gives privilege of ownership in a company. _5. When an entrepreneur financed his/her business with debt, lender has the right to tel him/ her how to run a business. _6. When an entrepreneur financed his/ her business with debt, payments are unpredictable and he/ she has no idea what needs to pay every month to pay off the loan. _7. When an entrepreneur financed his/ her business with debt, he/she keeps al the profits. _8. The lender can force the entrepreneur into bankruptcy if he/she cannot pay his/ her loan payments. _9. To force a borrower into bankruptcy for not making their loan…
(Multiple Choice) The main difference between retained earnings and contributed capital is that: 1. Retained Earnings is an expense, while Contributed Capital is part of Shareholders' Equity 2. Contributed Capital is the income earned by the company over time (minus dividends), while Retained Earnings is the money invested in the company by shareholders 3. None of the answers are correct 4. Retained Earnings is the income earned by the company over time (minus dividends), while Contributed Capital is the money invested in the company by shareholders 5. Only Retained Earnings increases when shares are reacquired
Which of the following decrease owner's equity or stockholder's equity? A. Paying cash to vendors. B. Paying cash to clients. C. Revenue. D. Expenses.
Dividends do not properly measure the value created by a company. True OR False PLEASE explain
Retained earnings not paid out to shareholders in the form of dividends are: Select one: a. Re-invested in the company b. Confiscated by the government c. Sold on the secondary market d. Paid as executive bonuses
Which of the following transactions would not create a cash flow? Payment of a cash and stock dividend A company buying back some of its own stock from a shareholder O Depreciation of building for the period Sale of equipment at book value (i.e., no gain or loss)
Which of the following is FALSE regarding the financial statements?
Which of the following liquidating dividend is not legal? a. Liquidating dividend of a continuing merchandising corporation b. Liquidating dividend of a mining corporation c. Liquidating dividend of a wasting asset corporation d. Liquidating dividend of a corporation at the state of bankruptcy
Suzanne knows that an increase to an expense reduces retained earnings (a stockholders’ equity account). However, she also knows that expense accounts have a debit balance, while retained earnings normally has a credit balance. Are these two pieces of information consistent? Explain.