The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.

111. If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then total liabilities equal $8,000.
TRUE

112. If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000, then total assets equal $7,000.
FALSE

Total assets = Total liabilities ($16,000) + Total stockholders' equity ($9,000) = $25,000.

113. The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources.
TRUE

 

114. The costs of advertising, utilities, and salaries in the current reporting period are examples of liabilities.
FALSE

These are examples of expenses.

115. The difference between revenues and expenses is referred to as net income or net loss.
TRUE

116. If a company reports revenues of $17,000 and expenses of $12,000, then net income equals $5,000.
TRUE

117. Expenses are regular cash payments by a corporation to its stockholders.
FALSE

Dividends are payments to stockholders.

118. Dividends represent a return of the company's profits to its owners, the stockholders.
TRUE

119. One of the differences between a partnership and a corporation is that owners of a partnership have limited liability.
FALSE

Stockholders of a corporation have limited liability.

120. Limited liability means the stockholders are not held personally responsible for the financial obligations of the corporation.
TRUE