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A company's retained earnings increased $375,000 last year and its assets increased $973,000.The company declared a $79,000 cash dividend during the year.What was last year's net income?


A) $296,000
B) $375,000
C) $454,000
D) $519,000

E) C) and D)
F) None of the above

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Rose Corporation began operations at the start of 2010.During 2010,it made cash and credit sales totaling $500,000 and collected $420,000 in cash from its customers.It purchased inventory costing $250,000,paid $15,000 for dividends and the cost of goods sold was $210,000.The corporation incurred the following expenses during 2010:  Salary expense $80,000 Interest expense 5,000 Insurance expense 4,000 Supplies expense 6,000 Income tax expense 34,000\begin{array} { l r } \text { Salary expense } & \$ 80,000 \\\text { Interest expense } & 5,000 \\\text { Insurance expense } & 4,000 \\\text { Supplies expense } & 6,000 \\\text { Income tax expense } & 34,000\end{array} Requirements: 1.Prepare an income statement showing revenues,expenses,pretax income,income tax expense,and net income for the year ended December 31,2010. 2.Based on the above information,what is the amount of accounts receivable on the balance sheet prepared as of December 31,2010? 3.Based on the above information,what is the amount of retained earnings on the balance sheet prepared as of December 31,2010?

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1. Income Statement for the year ended D...

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How is net income in the income statement different than cash flow from operations in the cash flow statement?

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Net income and cash flow from operations...

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Which financial statement would you utilize to determine whether a company will be able to pay liabilities which are due in 30 days?


A) Income statement
B) Balance sheet
C) Statement of retained earnings
D) Statement of cash flows

E) None of the above
F) A) and B)

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Which of the following would be reported in the financing section of a cash flow statement?


A) Cash paid for dividends to stockholders.
B) Cash paid for interest expense.
C) Cash paid to acquire equipment.
D) Cash received from sale of investments.

E) A) and B)
F) A) and C)

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Which of the following items is reported as an expense on the income statement?


A) Dividends declared
B) Cost of goods sold
C) Dividends paid
D) Accounts payable

E) None of the above
F) C) and D)

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Indicate on which financial statement you would expect to find each of the following.If an item can be found on more than one statement,list each statement.  Cash  Balance Sheet  Notes payable −−−−−− Wages expense −−−−−− Cost of goods sold −−−−−− Sales revenue −−−−−− Inventory −−−−−− Income tax expense −−−−−− Dividends −−−−−− Retained earnings −−−−−− Accounts payable −−−−−− Rent expense −−−−−−\begin{array} { l l } \text { Cash } & \text { Balance Sheet } \\\text { Notes payable } & ------\\\text { Wages expense } & ------\\\text { Cost of goods sold } & ------\\\text { Sales revenue } &------ \\\text { Inventory } & ------\\\text { Income tax expense } &------ \\\text { Dividends } & ------\\\text { Retained earnings } & ------\\\text { Accounts payable } &------ \\\text { Rent expense } &------\end{array}

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Here's where you would typically find ea...

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Madrid Company has provided the following data (ignore income taxes) : 2010 revenues were $77,500. 2010 net income was $33,900. Dividends declared and paid during 2010 totaled $5,700. Total assets on December 31,2010 were $217,000. Total stockholders' equity on December 31,2010 was $123,000. Retained earnings on December 31,2010 were $83,000. Which of the following is correct?


A) 2010 expenses were $37,900.
B) Total liabilities on December 31, 2010 were $11,000.
C) Retained earnings increased $28,200 during 2010.
D) Contributed capital on December 31, 2010 was $206,000.

E) None of the above
F) All of the above

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Which private sector body was given the primary responsibility to determine detailed auditing standards?


A) Financial Accounting Standards Board
B) Securities & Exchange Commission
C) Public Company Accounting Oversight Board
D) American Institute of Certified Public Accountants

E) All of the above
F) C) and D)

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Which of the following best describes the balance sheet?


A) It includes a listing of assets at their market values.
B) It includes a listing of assets, liabilities, and stockholders' equity at their market values.
C) It provides information pertaining to a company's assets and the providers of the assets.
D) It provides information pertaining to a company's liabilities for a period of time.

E) A) and B)
F) C) and D)

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Which of the following would not be found within the investing section of the statement of cash flows?


A) Cash paid to purchase a manufacturing building.
B) Cash received from the sale of stock to stockholders.
C) Cash received from the sale of manufacturing equipment.
D) Cash paid to purchase land.

E) A) and C)
F) All of the above

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Which of the following describes the amount of insurance expense reported on the income statement?


A) The amount of cash paid for insurance in the current period.
B) The amount of cash paid for insurance in the current period less any unpaid insurance at the end of the period.
C) The amount of insurance used up (incurred) in the current period to help generate revenue.
D) The amount of cash paid for insurance that is reported within the statement of cash flows.

E) A) and B)
F) A) and C)

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Stockholders' equity on the balance sheet consists of contributed capital and retained earnings.

A) True
B) False

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Which of the following statements is correct?


A) The statement of retained earnings always reports the same amount of dividend payments as does the statement of cash flows.
B) The statement of cash flows has a relationship with the balance sheet.
C) Dividends paid are reported on the statement of cash flows as an operating cash flow and on the income statement as a financing cash flow.
D) Net income is reported on the income statement but not on the statement of retained earnings.

E) None of the above
F) A) and B)

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Laker Company has provided the following information for its most recent year of operation: Cash collected from customers totaled $99,300. Cash borrowed from banks totaled $42,700. Cash paid to employees totaled $23,300. Cash paid for interest totaled $3,100. Cash received from selling an investment in Husky stock totaled $73,000. Cash payments to banks for repayment of money borrowed totaled $9,700. Cash paid for operating expenses totaled $11,200. Land costing $75,000 was sold for $75,000 cash. Cash paid for dividend payments to stockholders totaled $7,700. How much was Laker's net cash flow from financing activities?

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Which of the following best describes assets?


A) They are equal to liabilities minus stockholders' equity.
B) They are considered to be the economic resources of the business.
C) They are all reported on the balance sheet at their current market value.
D) They equal contributed capital.

E) None of the above
F) A) and C)

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When would a company report a net loss on the income statement?


A) When revenues are less than the sum of expenses plus dividends during an accounting period.
B) If assets decreased during an accounting period.
C) If liabilities increased during an accounting period.
D) When expenses exceeded revenues for an accounting period.

E) None of the above
F) A) and B)

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In what order would the items on the balance sheet appear?


A) Assets, retained earnings, liabilities, and contributed capital.
B) Contributed capital, retained earnings, liabilities, and assets.
C) Assets, liabilities, contributed capital, and retained earnings.
D) Contributed capital, assets, liabilities, and retained earnings.

E) B) and C)
F) C) and D)

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Which of the following would increase retained earnings?


A) An increase in expenses.
B) An increase in revenues.
C) Declaring a cash dividend.
D) Issuing additional common stock.

E) A) and C)
F) B) and C)

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Which of the following transactions affects both retained earnings and net income?


A) The payment of a cash dividend.
B) The recording of revenue for services provided.
C) The issue of stock in exchange for cash.
D) The borrowing of money from a bank.

E) A) and B)
F) A) and C)

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