Practice Problems

Complete these practice problems. Check your answers after you finish.




1. False. Corporation, not trust, is the third form.

2. True. The accounting for all three of these is covered in this text.

3. False. The income statement is dated using a period of time, such as "For the Year Ended 2010 December 31".

4. True. In addition, the statement of retained earnings shows dividends declared.

5. True. Both show assets, liabilities, and stockholders' equity.


  1. d. The ending balance in retained earnings is shown in both the statement of retained earnings and in the balance sheet.
  2. d. This form of the equation would not balance.
  3. b. The inflation accounting concept was not one of the ones discussed. The other two were the money measurement concept and the periodicity concept.
  4. c. When the stockholders invest cash, assets and stockholders' equity increase.
  5. c. The performance of services on account increases both accounts receivable and retained earnings.