A) Revenue is greater than expenses. If liabilities and common stock were unchanged, then

a. cash flows from operating activities were lower than cash flows from investing activities.

b. retained earnings was greater than net income during the period.

c. total assets increased.

d. the company must have purchased assets with cash.

B) Among other items, the balance sheet of BG Company reports retained earnings of $60,000 and total liabilities of $40,000. There is no common stock. Based on this information alone, you would know that

a. BG Company has enough cash to pay off its liabilities.

b. since the companys inception, the total amount of net income exceeded total dividends by $60,000.

c. net assets of the company amounted to $20,000.

d. total assets exceeded $100,000.

C) The Southern Company began the accounting period with assets of $600, common stock of $200, and retained earnings of $250. During the period, revenue was $500, expenses were $400, and dividends were $50. Common stock was unchanged during the accounting period. Liabilities increased by $100. Based on this information,

a. net income amounted to $50.

b. total assets at the end of the period were $750.

c. retained earnings at the end of the period amounted to $400.

d. liabilities at the end of the period amounted to $300.

D) Which of the following illustrates how a cash dividend affects a companys financial statements?

Balance Sheet

Income Statement

Statement of

Assets

=

Liab.

+

Equity

Rev.

Exp.

=

Net Inc.

Cash Flow

a.

+

n/a

+

n/a

n/a

n/a

+ FA

b.

+

n/a

+

+

n/a

+

+ OA

c.

-

n/a

-

n/a

+

-

- OA

d.

-

n/a

-

n/a

n/a

n/a

- FA

E) Which of the following accounts is not closed at the end of the accounting period?

a. Retained Earnings

b. Operating Expenses

c. Dividends

d. Service Revenue