Shareholders' Equity

question 36

Multiple Choice

Shareholders' equity:

• A)increases in value anytime total assets increases.
• B)is equal to total assets plus total liabilities.
• C)decreases whenever new shares of stock are issued.
• D)includes long-term debt, preferred stock, and common stock.
• E)represents the residual value of a firm.

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Definitions:

Credit Memo

A document issued to a purchaser by a vendor to reduce the amount that the purchaser owes, often as a result of a return or refund.

Gross Profit

The difference between the revenue earned from sales and the cost of goods sold, not accounting for other expenses.

Inventory Shrinkage

Loss of products between purchase from a supplier and sale, often due to theft, damage, or errors.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate periods.