8. Which of the following statements is CORRECT?

a.The balance sheet for a given year is designed to give us an idea of what happened to the firm during that year.

b.The balance sheet for a given year tells us how much money the company earned during that year.

c.The difference between the total assets reported on the balance sheet and the liabilities reported on this statement tells us the current market value of the stockholders equity, assuming the statements are prepared in accordance with generally accepted accounting principles (GAAP).

d.If a companys statements were prepared in accordance with generally accepted accounting principles (GAAP), the market value of the stock equals the book value of the stock as reported on the balance sheet.

e.The assets section of a typical companys balance sheet begins with cash, then lists the assets in the order in which they will probably be converted to cash, with the longest lived assets listed last.

10. Below are the 2012 and 2013 year-end balance sheets for Tran Enterprises:

Assets:	2013		2012
Cash	$ 200,000		$ 170,000
Accounts receivable	864,000		700,000
Inventories	2,000,000		1,400,000
Total current assets	$3,064,000		$2,270,000
Net fixed assets	6,000,000		5,600,000
Total assets	$9,064,000		$7,870,000
Liabilities and equity: Accounts payable	$1,400,000		$1,090,000
Notes payable to bank	1,600,000		1,800,000
Total current liabilities	$3,000,000		$2,890,000
Long-term debt	2,400,000		2,400,000
Common stock	3,000,000		2,000,000
Retained earnings	664,000		580,000
Total common equity	$3,664,000		$2,580,000
Total liabilities and equity	$9,064,000		$7,870,000

The firm has never paid a dividend on its common stock, and it issued $2,400,000 of 10-year, non-callable, long-term debt in 2012. As of the end of 2013, none of the principal on this debt had been repaid. Assume that the companys sales in 2012 and 2013 were the same. Which of the following statements must be CORRECT?

a.The firm increased its short-term bank debt in 2013.

b.The firm issued long-term debt in 2013.

c.The firm issued new common stock in 2013.

d.The firm repurchased some common stock in 2013.

e.The firm had negative net income in 2013.

14. During 2013, Bascom Bakery paid out $33,525 of common dividends. It ended the year with $197,500 of retained earnings versus the prior years retained earnings of $159,600. How much net income did the firm earn during the year?

a.$71,425

b.$74,996

c.$78,746

d.$82,683

e.$86,818