Chapter 1, Problem 12Q

(a)

To determine

Assets, Liabilities, and Stockholders’ Equity:

The chief elements of any business include all that it owns and owes. These include assets and liabilities. The resources owned by a business are called assets. The money the company owes to others or creditors are called liabilities. The claims made by the owners are called stockholders’ equity.

To ascertain: The meaning of assets, liabilities, and stockholders’ equity.

(b)

To determine

Stockholders’ equity:

The amount invested to a business by its shareholder or the donated capital and earnings from operations less any dividends issued gives the stockholders’ equity. The stockholders’ equity gives the ownership claim on the total assets of a business. The amount left after satisfying the creditors, belongs to the stockholders’ claim on the assets. It also includes common stock and retained earnings.

To ascertain: The items that affect stockholders’ equity.