10. Which of the statements below is TRUE?

A) The ownership accounts or owners' equity section of the balance sheet reflects the owners' stake in the firm.

B) The ownership accounts or owners' equity section of the balance sheet is made up of common stock but not retained earnings.

C) The retained earnings amount on the balance sheet really reflect retained earnings and other stockholder equity, but not treasury stock.

D) The Statement of Retained Earnings is used to show the distribution of the interest paid for the past period.

Answer:

11. An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment?

A) The interest earned in year one is $8.32 and the interest earned in year two is $8.32.

B) The interest earned in year one is $8.00 and the interest earned in year two is $8.64.

C) The interest earned in year one is $8.64 and the interest earned in year two is $8.00.

D) There is not enough information to solve this problem.

Answer: