Question one:

Assets=liabilities+equity

1. Assets= 42000+56000

=$9,800

1. Liabilities=115000-77000

=$38,000

1. Equity=54000-18500

=$35,500

Question two:

1. equity=425000-260000

=$165,000

1. total assets= 425000+73000

=$298,000

Total liability= 260000+32000

=$292,000

Total equity= 298000-292000

=$6,000

1. total assets =425000-52000

=$373,000

Total equity=165000+35000

=$200,000

Total liabilities=373000-200000

=$173,000

Question three

Balance sheet

• assets
• liabilities
• stockholders’ equity

Income statement

• revenue
• expenses
• net change in cash

Retained earnings statement

• dividends

Statement of cash flows

• cash flows from operating activities

Question four

             Current assets.

• Cash
• Inventory
• Accounts receivable

 

Property land and equipment

• Machinery

Intangible assets

• Copyright

Current liabilities

• Accounts payable

Long term liabilities

• Notes payable due in 5 years.
• Accumulated depreciation.

Contributed capital                                                                                                                            

• Common stock

Retained earnings

• Net income less dividends

Question five

CAVERNOUS HOME INC BALANCE SHEET PREPARED AS AT DECEMBER 31^ST          2013

Assets : Cash                               $3,200 Common stock               $7,000 Accounts receivable       $4,500 Retained earnings          $3,800	Liabilities: Notes payable             $ 5,000 Supplies                      $ 8,100

 

Question six

Net income= 78000-33200-20500-7000

=$17,300

 

Question seven

Retained earnings=82000+35000-55000-8000

=$54,000

Question seven

1. Manager-decides if the reported net income will cause the stock price to rise or fall.
2. Employee-estimates the amount of possible bonus.
3. Investor-decides if a factory is profitable or should be closed
4. Creditor-determines if a company will be able to repay its obligation.
5. Government-determine whether the company paid the proper amount of taxes