Owners' Equity Consists of Two Sources of Capital

question 71

Multiple Choice

Owners' equity consists of two sources of capital.They are

• A) The amount that the owners originally invested and profits earned by and reinvested in the company.
• B) Bank loans and money received from factoring accounts receivable.
• C) Bank loans and proceeds from the sale of shares of stock.
• D) Trade credit and bank loans.
• E) Dividends received by investors and bank loans.

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Definitions:

Unit-level Activity

Activities that are performed each time a unit is produced, directly associated with the production of units.

Manufacturing Overhead Costs

Expenses related to the production process that are not directly tied to the product, such as rent, utilities, and salaries of managers.

Activity-based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Production Order

A document issued to the manufacturing shop floor to produce a specific quantity of material within a certain timeframe.