31. Shareholders’ equity is a residual interest or claim—that is, the owners (shareholders) of a firm have a claim on assets
not
required to meet the claims of creditors.
32. The amounts that firms report as received from owners are equal to the amounts the firm received when it originally issued the shares of stock.
33. The balance sheet amount of shareholders’ equity does
not, and is
not
intended to, provide the user of the financial reports with a measure of the market value of common equity.
34. A potential investor can easily ascertain market value of common equity for a given publicly traded firm by looking up the most recent share price (as reported in various online services) and then multiplying this share price times the number of common shares outstanding, as reported on the balance sheet.
35. The balance sheet provides all the information an analyst wants or needs about a firm’s resources and the claims on those resources.
36. Accounting does
not
normally recognize mutually unexecuted contracts as assets or liabilities.
37. Both U.S. GAAP and IFRS require the disclosure, in the notes to the financial statements, of selected information about business segments.
38. In computerized systems, posting occurs instantly and automatically after journalizing.
39. Accounting is governed by the balance sheet equation, which shows the equality of
A. assets with liabilities plus shareholders’ equity.
B. assets plus liabilities with shareholders’ equity.
C. assets plus shareholders’ equity with liabilities.
D. assets with liabilities minus shareholders’ equity.
E. assets with shareholders’ equity minus liabilities.
40. To maintain the balance sheet equality, it is necessary to report every event and transaction in a dual manner. If a transaction results in an increase in the left hand side of the balance sheet, dual transactions recording requires that which of the following must occur, to maintain the balance sheet equation?
A. decrease another asset
B. increase a liability
C. increase shareholders equity
D. all of the above will maintain the balance sheet equation
E. none of the above