1. *In its annual report to shareholders, B&B reported that its shareholders equity increased from $200 million as of the beginning of the year to $216 million at year-end. Which of the following is a likely cause of this change in shareholders equity?

1. The companys liabilities increased during the year.
2. The company had an operating loss during the year.
3. The company distributed more dividends than it earned in profit during the year.
4. The company was profitable during the year.

2. Which one of the following was mandated by the Sarbanes-Oxley Act?

1. Annual audits by Certified Public Accountants.
2. Certifications in writing by CFOs that a companys financial statement information fairly represents the companys financial condition and results of operations.
3. The enforcement of accounting standards used by companies issuing securities.
4. The use of generally-accepted accounting principles to prepare financial statements.

3. *Which of the following contains only current asset accounts?

1. Accounts Receivable and Prepaid Expenses
2. Retained Earnings and Cash
3. Inventory and Sales Revenue
4. Equipment and Accounts Receivable

4. B&B reported the following amounts on its balance sheet (in thousands) for Year 1 and Year 2:

Year End	Assets		Liabilities	Shareholders' Equity
Year 1	$70,000		$35,000		$35,000
Year 2	81,000		28,000		53,000

No dividends were declared and no additional investments of capital were made in the company during Year 2. What is the companys net income for Year 2?

1. $18,000,000
2. $20,000,000
3. $43,000,000
4. Not enough information is provided to determine the answer.

5. The beginning-of-year common share price (P_t-1) for B&B for the year was $40.15, and its end-of-year common share price (P_t) was $45.45. The companys annual dividend (D_t) for the year was $2.00. What is the companys annual rate of return?

1. 16.77%
2. 12.82%
3. 11.49%
4. 18.18%

6. B&B Company reported total retained earnings at December 31, Year 2 of $300,000. It provided the following information for Year 1 and Year 2:

	Year 2	Year 1
Retained earnings (beginning)	$265,000	$125,000
Revenues	900,000	870,000
Expenses	800,000	625,000
Dividends	?	105,000

How much dividends did the company pay in Year 2?

1. $75,000
2. $65,000
3. $82,000
4. $100,000

7. B&B Co. reported the following account balances (in thousands):

Administrative expenses	$ 66,000
Accounts receivable	140,000
Sales revenue	690,000
Selling expenses	144,000
Cost of goods sold	425,000
Cash dividends paid	80,000

How much is net income for B&B Co.?

1. $ 55,000
2. $125,000
3. $265,000
4. $155,000

8. Accounting is the language of Business?

A. True

B. False

9. B&B Co. opened a new computer store and completed the following transactions during May:

1. Shareholders invested $280,000 cash in exchange for common stock.

2. Purchased a delivery truck for $14,000 cash.

3. Purchased $3,400 of parts on account. Paid $3,200 of the balance. At the end of May, $400 of parts remained on hand.

4. Paid $16,200 for selling expenses.

5. Sold parts to customers and collected $18,000 cash. Billed corporate clients for an additional $2,400 of parts delivered during May.

How much will B&B Co. report on its balance sheet as Cash at May 31?

1. $280,000
2. $264,600
3. $254,600
4. $170,000

10. The following cash flow information was taken from B&B, Inc.s statement of cash flow:

	Year 2	Year 1
Cash, beginning balance	$ 20,000 Million	$ 2,450 Million
Cash flow from/(for) operating activities	14,500 Million	(4,300) Million
Cash flow from/(for) investing activities	?	1,700 Million
Cash flow from/(for) financing activities	(1,200) Million	?

At the end of Year 2, B&B balance sheet reported cash totaling $20,600 million. How much cash did B&B, Inc. use for investing activities during Year 2?

1. $12,700 Million
2. $21,360 Million
3. $11,610 Million
4. $10,940 Million