FAR Chapter 3 Problem 3

1. Total assets are 10. Total liabilities are 6. Therefore, the total equity is 4. True
2. Total assets are 20. Total liabilities are 16. Therefore, the total equity is 36. False
3. Total assets are 80. Total equity is 60. Therefore, total liabilities are 20. True
4. Total liabilities are 60. Total equity is 30. Therefore, the total assets are 30. False
5. The total income is 100. Total expenses are 40. Therefore, the difference is that 30 is profit.
True
6. The total income is 50. Total expenses are 60. Therefore, the difference is that 10 is a loss.
True
7. Beginning equity is 100. Profit during the period is 20. If there are no other changes in
equity, the ending balance of equity must be 120. True
8. Beginning equity is 10. Loss during the period is 4. If there are no other changes in equity,
the ending balance of equity must be 6. True
9. Total assets are 100. Total liabilities are 40. Total equity, before income and expenses, are
40. Therefore, the profit is 20. True
10. Total assets are 100. Total liabilities are 60. Total equity, before income and expenses, is 30.
If the total income is 50, the total expenses must be 30. False