1.

Question 1

The company has net income for the year of $110,000. The balance in Retained Earnings at the beginning of the year is $70,000. The company declared dividends of $50,000 during the year. What is the ending balance in Retained Earnings?

Hint: you may find it helpful to use a t-account as you work through this question.

1 point

$60,000

$130,000

$10,000

$180,000

2.

Question 2

Company A reported salary expense of $12,000 in its annual Income Statement. The balance in Salaries Payable decreased by $3,000 during the year, according to its Balance Sheet. What amount should Company A report as an adjustment to Net Income in its Statement of Cash Flow, assuming the indirect method is used?

1 point

Minus $15,000

Minus $3,000

Plus $3,000

Plus $9,000

3.

Question 3

Company A's annual Income Statement shows net income of $75,000 and depreciation expense of $25,000. Its Balance Sheet as of the end of the year shows the following information:

What amount should Company A report as net cash flow from operating activities in the Statement of Cash Flow, assuming no other transactions/accounts?

1 point

$80,000

$60,000

$120,000

$140,000

4.

Question 4

The net book value of a truck at the beginning of the year is $30,000. During the year, the company recorded depreciation expense of $10,000 before it sold the truck for $25,000 in cash. Which of the following will be found in the Statement of Cash Flows prepared using the Indirect Method?

1 point

$10,000 depreciation expense added back to Net Income in Operating Activities section;

$5,000 gain on sale added to Net Income in Operating Activities section;

Sales proceeds of $25,000 listed in Operating Activities section

$10,000 depreciation expense added back to Net Income in Operating Activities section;

$5,000 gain on sale subtracted from Net Income in Operating Activities section;

Sales proceeds of $25,000 listed in Investing Activities section

$10,000 depreciation expense added back to Net Income in Operating Activities section;

$5,000 gain on sale in Investing Activities section;

Sales proceeds of $20,000 listed in Investing Activities section

$10,000 depreciation expense added back to Net Income in Operating Activities section;

$20,000 book value of the Truck listed as cost of PP&E sold in Investing Activities section;

Sales proceeds of $25,000 listed in Investing Activities section

5.

Question 5

In Year 2, Company B has the following information:

What amount should Company B report as net cash flow from financing activities in the Year 2 Statement of Cash Flow, assuming no other transactions/accounts?

1 point

$30,000, cash outflow

$5,000, cash inflow

$55,000, cash inflow

$30,000, cash inflow

6.

Question 6

Company A has the following information from its financial statements:

Which of the following statements is correct?

1 point

The increase in total liabilities is due to taking out a new loan in Year 20X2.

Retained Earnings increased by $50,000.

The liabilities of Year 20X2 decreased by 33.33% from $30,000 to $20,000, compared to Year 20X1.

The debt/assets ratio decreased in Year 20X2.