Grass Gadgets had sales of $30 million and net income of $2 million in 2008. Grass paid a dividend of $1.5 million. Assuming that their beginning balance for retained earnings was $3 million, calculate their ending balance for retained earnings.
A) $2.5 million
B) $3 million
C) $3.5 million
D) $4 million
Total equity on the balance sheet increases as dividends paid increases.
Answer: FALSE
A balance sheet is a statement of the financial position of the firm on a given date, including its asset holdings, liabilities, and equity.
Answer: TRUE
Under current accounting rules, plant and equipment appear on a company's balance sheet valued at replacement value.
Answer: FALSE
When a corporation sells common stock to investors, the amount is added to revenue on the income statement.
Answer: FALSE
An advantage of balance sheet numbers is that assets reflect current market values.
Answer: FALSE
A firm's balance sheet provides a representation of the current market value of the company.
Answer: FALSE
Gross plant and equipment minus accumulated depreciation represents the fair market value of a company's fixed assets.
Answer: FALSE
