Question

Which of the following is the company’s recognition of the investment made by the management of the company?

Assets

Liabilities

Equity

Revenues

Expenses

Which of the following includes the amount that a business has to pay back in the future?

Assets

Liabilities

Equity

Revenues

Expenses

When a company’s liabilities increase, its assets may decrease (in the same transaction).

True

False

Revenues & expenses have nothing to do with Assets & Liabilities; because they are two different sets of information. Only the profit (or loss) will affect the Owners' Equity.

True

False

Although spending a large amount on FF&E is considered an investment, the spending amount does not increase Owners’ Equity.

True

False

Shareholders of a company often receive compensation per share from the firm - either in cash or in additional share of common stock. What is this compensation called; and how is it determined (or calculated)? Select the most appropriate answer from the list given below.

It is called Dividends. It is determined by the Board of Directors.

It is called P/E ratio. The formula is: Stock price in the market divided by the EPS.

It is ROE. The formula is: Net Profit amount divided by the average Equity owned by the shareholders.

It is called Earnings per Share (EPS). The formula is: Net Income divided by the # of outstanding Common Stock.

Answer 1

Answer-1-The correct option will be -Assets

the company’s recognition of the investment made by the management of the company is Assets.

2-The correct option is -Liabilities

the amount that a business has to pay back in the future are liabilities as the business has to pay back it.

3-False

When a company’s liabilities increase, its assets may not decrease because increase in liabilities also increase the asset.

4-False

Expenses and income also affect the owner's equity & assets as depreciation decreases assets and all expenses decreases owner's equity

5-False

6-The correct option is-d-It is called Earnings per Share (EPS). The formula is: Net Income divided by the # of outstanding Common Stock.