Homework #5

Which of the following statements concerning accumulated depreciation is most correct?

none

Which of the following statements about the balance sheet is most correct?

none are correct

Assume that a business's balance sheet reports total assets of $500,000 and total liabilities of $300,000. Now assume that $20,000 of net fixed assets (net plant and equipment) are written off due to technological obsolescence. All else the same, what is the total equity of the business after the write-off?

180,000

Which of the following statements concerning the statement of cash flows is most correct?

The statement of cash flows uses information from both the income statement and the balance sheet.

Assume that the business uses $10,000 of its cash to pay for supplies that were ordered on credit terms and have already been received and booked (recorded on the balance sheet). Which of the below statements reflects the resulting balance sheet change?

The cash account decreases by $10,000 and the accounts payable account decreases by $10,000.

Which of the following equations best describes the accounting identity?

assets= liability + equity

Assume that the value of diagnostic equipment listed as an asset on the balance sheet suddenly falls because of technological obsolescence. How is the balance sheet adjusted to preserve the accounting identity?

equity is reduced

Like the income statement, the balance sheet reports the assets and liabilities of an organization over some period of time.

false

Which of the following statements about the organization of the balance sheet is most correct?

The balance sheet has upper and lower (or left and right) sections, Assets are divided into current and long-term categories.