Chapter 1, Problem 34DQ

To determine

Assets:

Assets are the resources owned by a business to carry out production and sales activities. They are associated with a future economic value that can be expressed in terms of monetary values. All assets are meant to provide future services or benefits. Examples include cash, accounts receivable, land, buildings, equipment, vehicles, investments, etc.

Liabilities:

Liabilities are the obligations against assets that are to be fulfilled in the future. Most of the businesses borrow money or buy goods and services from a supplier on credit. This incurs a future obligation on the businesses, which is to be fulfilled in the future. Examples include loans payable, interest payable, accounts payable, wages payable, etc.

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.

Whether the total assets of S Company is equal to its total liabilities plus total equity.