For each statement provided, choose the letter of the appropriate term from the list that each statement best describes.Some terms may be used more than once, while others are not used at all.
-The owners' claims on the assets of an entity.
A)Capital stock
B)Asset
C)Owners' equity
D)Time period
E)Dividends
F)Economic entity concept
G)Expense
H)Retained earnings
I)Cost principle
J)Creditor
K)Liability
L)Revenue
M)Going concern
N)Monetary unit
O)Corporation

Question

Quizplus · Accepted Answer

Owners' equity represents the owners' claims on the assets of the entity.

Answer: O
 A corporation is a legal entity that can own assets, incur liabilities, and conduct business activities.

Answer: H
 Retained earnings represent the cumulative profits earned by a company that have not been distributed to shareholders as dividends, and therefore represent a portion of owners' equity.

Answer: K
 A liability is an obligation or debt that is owed to another party.

Answer: L
 Revenue represents the earnings generated from a company's business activities, such as sales of goods or services.

Answer: J
 A creditor is a party to whom a debt is owed, such as a lender or supplier.

Answer: G
 An expense is a cost incurred by a company in order to generate revenue.

Answer: E
 Dividends represent the portion of a company's profits that are distributed to shareholders.

Answer: M
 The going concern concept assumes that a company will continue to operate in the future, and therefore its assets and liabilities are valued based on the assumption that the company will not be liquidated.

Answer: I
 The cost principle requires that a company's assets be recorded at their original cost, rather than their current market value.

Answer: A
 Capital stock represents the ownership interest in a corporation that is represented by shares of stock.

Answer: N
 The monetary unit concept assumes that financial statements should be reported in a common currency, such as U.S. dollars, and therefore all transactions are recorded in terms of that currency.

Answer: D
 A time period is the specific period of time over which financial statements are prepared, such as a month, quarter, or year.

For Each Statement Provided, Choose the Letter of the Appropriate