134. If total liabilities decreased by $75,000 and stockholders’ equity increased by $15,000 during a period of time, then total assets must change by what amount and direction during that same period?
a. $60,000 decrease
b. $60,000 increase
c. $75,000 increase
d. $90,000 increase
Ans: A, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
Solution: ($75,000) + $15,000 = ($60,000)
(Tot. liab. dec. + st. eq. inc.)
135. If total liabilities decreased by $105,000 and stockholders’ equity decreased by $35,000 during a period of time, then total assets must change by what amount and direction during that same period?
a. $140,000 increase
b. $70,000 decrease
c. $140,000 decrease
d. $70,000 decrease
Ans: C, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
Solution: ($105,000) + ($35,000) = ($140,000)
(Tot. liab. dec. + st. eq. dec.)
136. If total liabilities increased by $69,000 during a period of time and stockholders’ equity decreased by $27,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total assets is a(n)
a. $69,000 increase.
b. $96,000 increase.
c. $42,000 decrease.
d. $42,000 increase.
Ans: D, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Measurement, AICPA PC: Problem Solving, IMA: Business Economics
Solution: $69,000 - $27,000 = $42,000 increase.
(Tot. liab. inc. - st. eq. dec.)
137. The balance sheet
a. summarizes the changes in retained earnings for a specific period of time.
b. reports the changes in assets, liabilities, and stockholders’ equity over a period of time.
c. reports the assets, liabilities, and stockholders’ equity at a specific date.
d. presents the revenues and expenses for a specific period of time.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
138. The retained earnings statement
a. summarizes the changes in retained earnings for a specific period of time.
b. reports the changes in assets, liabilities, and stockholders’ equity over a period of time.
c. reports the assets, liabilities, and stockholders’ equity at a specific date.
d. presents the revenues and expenses for a specific period of time.
Ans: A, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
139. Liabilities
a. are future economic benefits.
b. are debts and obligations.
c. possess service potential.
d. are things of value owned by a business.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
140. Liabilities of a company are owed to
a. debtors.
b. owners.
c. creditors.
d. stockholders.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
141. Stockholders’ equity can be described as claims of
a. creditors on total assets.
b. owners on total assets.
c. customers on total assets.
d. debtors on total assets.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics