Which of the Following Statements Is CORRECT

question 37

Multiple Choice

Which of the following statements is CORRECT?

• A) A typical industrial company's balance sheet lists the firm's assets that will be converted to cash first, and then goes on down to list the firm's longest lived assets last.
• B) The balance sheet for a given year, say 2012, is designed to give us an idea of what happened to the firm during that year.
• C) The balance sheet for a given year, say 2012, tells us how much money the company earned during that year.
• D) The difference between the total assets reported on the balance sheet and the debts 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).
• E) For most companies, the market value of the stock equals the book value of the stock as reported on the balance sheet.

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Definitions:

Accounts Payable

Accounts payable represent short-term liabilities or money owed by a business to its creditors or suppliers for goods and services purchased on credit.

Journal Entry

A record of a financial transaction in the accounting books of a business, showing the accounts affected and the amounts.

Invoice

A document issued by a seller to a buyer that lists goods or services provided, prices, and payment terms.

Ledger

A comprehensive collection of a company's financial transactions, organized by account.