Which of the Following Statements Is CORRECT

question 65

Multiple Choice

Which of the following statements is CORRECT?

• A) The balance sheet for a given year, say 2008, is designed to give us an idea of what happened to the firm during that year.
• B) The balance sheet for a given year, say 2008, tells us how much money the company earned during that year.
• C) The difference between the total assets reported on the balance sheet and the liabilities reported on this statement tells us the current market value of the stockholders' equity, assuming the statements are prepared in accordance with generally accepted accounting principles (GAAP).
• D) If a company's statements were prepared in accordance with generally accepted accounting principles (GAAP), the market value of the stock equals the book value of the stock as reported on the balance sheet.
• E) The assets section of a typical industrial company's balance sheet begins with cash, then lists the assets in the order in which they will probably be converted to cash, with the longest lived assets listed last.

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Definitions:

Total Cost

The complete cost of production, including both fixed and variable costs.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of production or sales activity.

Client-visits

The occurrence of clients or potential clients physically coming to a business location or being visited by the business’s representatives.

High-low Method

A technique used in cost accounting to estimate variable and fixed cost elements of a cost by using the highest and lowest activity levels.