Question

11. Adventure Inc.'s total stockholders’ equity balance was $40,000 on 12.31.20. During 2020 the firm had a net loss of $8,000, paid $6,000 in dividends, and sold an additional $7,000 of common stock. The 1.1.20 balance of total stockholders’ equity was:______________

12. Cash received from selling building and land no longer used by a manufacturing company is reported within what section of a statement of cash flows:
a. Operating Activities
b. Investing Activities
c. Financing Activities

13. If a firm's accounts receivable turnover equals 8 times, its average collection period is approximately    _________ days


14. A firm's debt ratio is 45%. This means that the firm’s ______________ ratio must be 55%
a. Current
b. Times interest earned
c. Equity
d. Asset

Answer 1

Ans:

11. Total shareholders Equity on 01.01.2020 = shareholders Equity on 31.12.2020 + Net loss + Dividend - Common stock sold

= $ 40,000 + $ 8,000 + $ 6,000 - $ 7,000

= $ 47,000

12. Option B investing actiivty

since building and land are investing activity

13. Average collection period = 365 days / accounts receivable turnover

= 365 / 8

= 45.625 days

14. Debt ratio = debt / Total assets = 45%

it means Equity = 100% - Debt ratio

= 100% - 45%

= 55%

Option C, Equity