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Unformatted text preview: Answers Quick Check (pages 26 & 27) 1. B. A proprietorship has one owner. The other three statements are true. 2. A. Assets (economic resources) are generally valued at historical cost. 3. D. The accounting equation is: Assets = Liabilities + Owners equity. This can be reordered to: Assets Liabilities = Owners Equity. This is actually a good description of owners equity. The owners are entitled to everything left in the business after the creditors have been paid. 4. C. An asset is an economic resource that is expected to benefit future operations. Assets dont have to have physical form (patents are assets and they dont have physical form) nor do they have to represent cash or have a ready market value. 5. D. This is an important question. There are three flow financial statements that cover a period of time: the income statement; the statement of owners equity (or retained earnings); and the statement of cash flows. These all show what happened over a period of time. In contrast, the balance sheet shows what the things a company owns (resources); the liabilities (debts); and the owners interest at a point of time.(resources); the liabilities (debts); and the owners interest at a point of time....
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