When Reviewing the Balance Sheet for Portable Pet Care, Inc

question 12

Multiple Choice

When reviewing the balance sheet for Portable Pet Care, Inc., a mobile small animal care business, Ricky noted the following information: Company assets totaling $3.5 million, and liabilities totaling $1.3 million. On paper, the net worth (owners' equity) for this business =

• A) $2.2 million.
• B) $4.8 million.
• C) $3.5 million.
• D) $0.2 million.

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Definitions:

Operating Activity

Transactions that relate to the primary business operations, such as revenue from sales and expenses for materials and labor.

Supplies

Items used in the operation of a business that are not directly tied to the products or services offered, such as office supplies.

Accounts Payable

This refers to the amounts owed by a company for goods or services that have been received but not yet paid for.

Cash Dividends

Cash dividends refer to the distribution of a company's earnings to its shareholders, usually in the form of cash.