MSB 201-001 BYU MIDTERM 2
QUESTIONS AND VERIFIED ANSWERS
\.What is capital? - ANSWERS✔-Money
\.What is debt financing? - ANSWERS✔-Borrowing money from a creditor (i.e.,
bank) with the expectation that the company will pay them back. The creditor will
not own any part of the business.
Debt financing is borrowing money from a creditor (i.e., bank) with the
expectation that the company will pay them back. The creditor will not own any
part of the business.
\.Which of the following financial statements is shown as of one specific date? -
ANSWERS✔-Balance Sheet
\.Which of the following is NOT a way financial accounting information is used? -
ANSWERS✔-Breakeven Analysis
\.Select the TWO critical conditions that must exist for financial statements to be
useful. - ANSWERS✔-Comparability
Creditability
\.The balance sheet embodies which of the following basic accounting equations?
- ANSWERS✔-Assets = Liabilities + Owners Equity
, Assets are financed through either liabilities or owners equity, which means that
Assets must be equal to Liabilities + Owners Equity. This concept is found on the
balance sheet, which means the two sides of this equation must balance.
\.Owners Equity can be defined as: - ANSWERS✔-Common stock + Retained
earnings
\.If a company's total assets amount to $150,000 and total liabilities and capital
contributions amount to $70,000 and $20,000, respectively, then retained
earnings must amount to: - ANSWERS✔-$60,000
Assets = Liabilities + Owners' Equity
Assets = Liabilities + Capital Contrib. + Retained Earnings
150,000 = 70,000 + 20,000 + ?
150,000 - 70,000 - 20,000 = ?
?= 60,000 Retained Earnings
\.Given the following balances at the end of the year: Liabilities: $22,000 Retained
Earnings: $4,000 Capital Stock: $8,000. Determine the total amount of assets: -
ANSWERS✔-$34,000
Total Assets = Total Liabilities + Total Owner's Equity
Total Assets = Total Liabilities + Capital Stock + Retained Earnings
? = $22,000+ $8,000 + $4,000
? = $34,000
QUESTIONS AND VERIFIED ANSWERS
\.What is capital? - ANSWERS✔-Money
\.What is debt financing? - ANSWERS✔-Borrowing money from a creditor (i.e.,
bank) with the expectation that the company will pay them back. The creditor will
not own any part of the business.
Debt financing is borrowing money from a creditor (i.e., bank) with the
expectation that the company will pay them back. The creditor will not own any
part of the business.
\.Which of the following financial statements is shown as of one specific date? -
ANSWERS✔-Balance Sheet
\.Which of the following is NOT a way financial accounting information is used? -
ANSWERS✔-Breakeven Analysis
\.Select the TWO critical conditions that must exist for financial statements to be
useful. - ANSWERS✔-Comparability
Creditability
\.The balance sheet embodies which of the following basic accounting equations?
- ANSWERS✔-Assets = Liabilities + Owners Equity
, Assets are financed through either liabilities or owners equity, which means that
Assets must be equal to Liabilities + Owners Equity. This concept is found on the
balance sheet, which means the two sides of this equation must balance.
\.Owners Equity can be defined as: - ANSWERS✔-Common stock + Retained
earnings
\.If a company's total assets amount to $150,000 and total liabilities and capital
contributions amount to $70,000 and $20,000, respectively, then retained
earnings must amount to: - ANSWERS✔-$60,000
Assets = Liabilities + Owners' Equity
Assets = Liabilities + Capital Contrib. + Retained Earnings
150,000 = 70,000 + 20,000 + ?
150,000 - 70,000 - 20,000 = ?
?= 60,000 Retained Earnings
\.Given the following balances at the end of the year: Liabilities: $22,000 Retained
Earnings: $4,000 Capital Stock: $8,000. Determine the total amount of assets: -
ANSWERS✔-$34,000
Total Assets = Total Liabilities + Total Owner's Equity
Total Assets = Total Liabilities + Capital Stock + Retained Earnings
? = $22,000+ $8,000 + $4,000
? = $34,000
