Explanation Accounting equation : Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below: Assets = Liabilities + Shareholders Equity Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company. Net income is calculated using the formula given below: Net Income = Total Revenues − Total Expenses A. Calculate the following: i. Net Income: Net Income = Total Revenues − Total Expenses =$110,000 − $ 82 , 000 = $ 28 , 000 ii. Stockholder's equity: Shareholders Equity = Assets − Liabilities = $150,000 − $ 70 , 000 = $ 80 , 000 B. Calculate the following: i. Total Revenues: Total Revenues = Net Income + Total Expenses =$12,000 + $ 80 , 000 = $ 92 , 000 ii. Total Liabilities: Liabilities = Assets − Shareholders Equity = $112,000 − $ 70 , 000 = $ 42 , 000 C. Calculate the following: i

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ISBN: 9781260823875

Author: PHILLIPS

Publisher: MCGRAW-HILL CUSTOM PUBLISHING

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Chapter 1, Problem 8E

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To Compute: The missing amounts.

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Chapter 1, Problem 7E

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Chapter 1 Solutions

FUNDAMENTALS OF FINANCIAL ACCOUNTING

Ch. 1 - Define accounting.Ch. 1 - Prob. 2Q Ch. 1 - Briefly distinguish financial accounting from...Ch. 1 - The accounting process generates financial reports...Ch. 1 - Explain what the separate entity assumption means...Ch. 1 - List the three main types of business activities...Ch. 1 - What information should be included in the heading...Ch. 1 - What are the purposes of (a) the balance sheet,...Ch. 1 - Explain why the income statement, statement of...Ch. 1 - Briefly explain the difference between net income...

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The missing amounts.

Solution Summary: The author explains the accounting equation, which creates a relationship between the resources and expenses of the company.

To Compute: The missing amounts.

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Chapter 1 Solutions