ACCT 212 WEEK 1 QUIZ

Exam Help for DeVry Students Answer Explanation: The accounting equation states that Assets = Liabilities + Equity (Another way to write this statement is Liabilities = Assets – Equity). Assets are things owned by the business with future value. Cash, receivables (amounts owed to the business), office equipment, delivery trucks, and a building are all examples of assets that a typical business might own. In this example the Assets are Cash and Accounts Receivable. Equity is the portion of the assets that are owned by the shareholders. It represents the amounts invested by the owners and the amount of profits that have been retained (not distributed back to the owners) over time. In this example the Equity is Common Stock and Retained Earnings. Therefore the solution to the question is: Liabilities = Cash ($28000) + Accounts Receivable ($44000) – Common Stock ($19000) – Retained Earnings $12,000; whereas Liabilities = $41000 Answer Explanation: Net income = Revenue – Expenses; therefore the revenue in this example is $147,000 - $142,000 or $5000. The change in returned earnings is equal to Net income - Declared Dividends. The example states that the Declared Dividends are $3000. Since we just calculated the Net Income as $5000 then the Retained earnings are $5000 - $3000 = $2000. Answer Explanation: Assets are things owned by the business with future value. Cash, receivables (amounts owed to the business), office equipment, delivery trucks, and a building are all examples of assets that a typical business might own.