14. The financial statement that business for a presents a summary of the revenu
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14. The financial statement that business for a presents a summary of the revenues and expenses of a specific period of time, such as a month or year, is called a(n) a. prior period statement b. statement of owner's equity c. income statement d. balance sheet 15. All of the following statements regarding the ratio of liabilities to owner's equity are true excent a. A ratio of 1 indicates that liabilities equal owner's equity. b. Corporations can use this ratio but substitute total stockholders' equity for total owner's equity. c. The higher this ratio, the better able a business is to withstand poor business conditions and pay creditors. d. The lower this ratio, the better able a business is to withstand poor business conditions and pay creditors. 16. Explain the meaning of (a) the objectivity concept (b) the unit of measure concept Give the major disadvantage of disregarding the cost concept and constantly revaluing assets based on appraisals and opinions 17. On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $27,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $13,900. What is the amount of owner's equity (John Wong's capital) as of July 1 of the current year 18. Ting Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, of Year 1, Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, 19. determine the following amounts. a. Hsu's liabilities as of December 31 of Year 1. b. Hsu's liabilities as of December 31 of Year 2, assuming that assets c. Net income or net loss during Year 2, assuming that as of December 31, Year 2, increased by $56,000 and owner's equity decreased by $32,000. assets were $592,000, liabilities were $450,000, and there were no additional investments or withdrawals. 20. Given the following Beginning capital $58,000 Ending capital $30,000 Owner's withdrawals $25,000 Calculate net income or net loss.Explanation / Answer
14. Answer: Income Statment.
Explanation: It presents a summary of the revenues, gains, expenses, losses, and net income or net loss of an entity for the period.
15. Answer: The higher this ratio, the better able a business is to withstand poor business conditions and pay creditors.
16.(a): Objectivity Concept: It implies that every financial transaction should be evidenced and supported by business documents i.e., invoices, vouchers,Delivery orders etc.
(b) The Unit of Measure concept: This concept states that all transactions must be consistently recorded using the same currency. If a transaction involves receipts or payments in a different currency, the amount should be converted to the home currency used by an organization before being recorded.
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