(Multiple Choice Question)

1. The financial statement that reports revenues and expenses is called the

a. income statement.

b. balance sheet.

c. statement of cash flows.

d. statement of retained earnings.

2. Another name for the balance sheet is the

a. statement of financial position.

b. statement of operations.

c. statement of profit and loss.

d. statement of earnings.

3. Mason Corporation began the year with cash of $35,000 and a computer that cost $62,000. During the year Mason earned sales revenue of $55,000 and had the following expenses: salaries, $58,000; rent, $21,000; and utilities, $6,000. At year-end Mason’s cash balance was down to $18,000. How much net income (or net loss) did Mason experience for the year?

a. ($30,000)

b. $55,000

c. $38,000

d. ($17,000)

4. Best Instruments had retained earnings of $200,000 at December 31, 2011. Net income for 2012 totaled $105,000, and dividends for 2012 were $45,000. How much retained earnings should Best report at December 31, 2012?

a. $200,000

b. $305,000

c. $245,000

d. $260,000

5. Net income appears on which financial statement(s)?

a. Income statement

b. Statement of retained earnings

c. Balance sheet

d. Both a and b

6. Cash paid to purchase a building appears on the statement of cash flows among the

a. Stockholders’ equity.

b. Investing activities.

c. Financing activities.

d. Operating activities.

7. The stockholders’ equity of Verkovsky Company at the beginning and end of 2012 totaled $21,000 and $23,000, respectively. Assets at the beginning of 2012 were $25,000. If the liabilities of Verkovsky Company increased by $12,000 in 2012, how much were total assets at the end of 2012? Use the accounting equation.

a. $16,000

b. $35,000

c. $37,000

d. $39,000

8. Murphy Company had the following on the dates indicated:

Murphy had no stock transactions in 2012; thus, the change in stockholders’ equity for 2012 was due to net income and dividends. If dividends were $80,000, how much was Murphy’s net income for 2012? Use the accounting equation and the statement of retained earnings.
a. $291,000
b. $211,000
c. $220,000
d.$371,000

Transcribed Image Text:

12/31/12 12/31/11 Total assets Total liabilities $750,000 $530,000 24,000 33,000