Friday, 25 September 2015

Solution of both Accounting questions

Contributed capital is basically the stockholders’
1. You and Frank are studying for an upcoming accounting exam. Frank says, “Contributed capital is basically the stockholders’ equity of the company. It includes things like the common stock, paid-in capital in excess of par, preferred stock, and retained earnings.” Do you agree with Frank? Why or why not? Explain with examples.

2. Another student in your accounting class says that, as she understands it, most current liabilities appearing on the balance sheet arise from transactions involving operating activities. Do you agree? Why or why not? List three current liabilities that might appear on the balance sheet. For each one, explain the underlying transaction that must have occurred  for that specific liability to arise. Indicate, for each liability, whether it is the result of an operating, financing, or investing activity.

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