Problem -
Review the background material for the second module before attempting the case below in order to answer a series of questions about the balance sheet for ABC Company shown below. Start with the accounting equation and pay attention to definitions of assets, liabilities, and equity.
Case Assignment - Required
Answer the questions below and explain your answer with numbers, computations, or a sentence or two.
1. Determine total assets and total liabilities for ABC Company.
2. Complete the accounting equation below using numbers instead of words.
Assets = Liabilities + Equity
1. Are short-term payables or receivable larger? Explain the significance of the difference.
2. Is the order in which assets and liabilities are listed on the balance sheet significant? Explain.
3. Determine the total amount owed by ABC at the end of the year.
4. Does the company have more assets or liabilities? What is the significance of determining the difference between net assets and net liabilities?
5. If the company borrows an additional $10,000 which two balance sheet accounts will change? The new totals for total assets and total liabilities are ...
6. Explain retained earnings.
7. What is the "total wealth" of the company have according to the balance sheet?
8. Assume that the company paid $10,000 of dividends to the owners. Which balance sheet account (item) would have been affected by the payment?
Assignment Expectations
Respond to all questions showing your computations and/or using your own words. Do not use an essay format.
Show sources when appropriate and APA is suggested, but not required.
- The objective for this assignment is to evaluate accounting concepts of balance sheet.