question 5:

Amazon increased which account when it originally issued shares of its stock for cash?

	a.	Retained earnings
	b.	Treasury stock
	c.	Common stock
	d.	Net product sales

question 6:

Amazon's cash-based net income for the most recent reporting period was (in millions):

	a.	$3,033.
	b.	$18,434.
	c.	$4,106.
	d.	$177,866.

AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Total Treasury Stock Retained arnings Stockholders Shares Amount Equity Balance as of January 1, 2015 Net income 465 S 5 S (1,837) S 11,135 $(511) S 1,949 596 10,741 596 Other comprehensive income (loss) Exercise of common stock options (212) (212) 4 119 2,131 4 119 2,131 Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31,2015 Net income Other comprehensive income (loss) 471 5 (1,837) 13,394 (723)2,54513,38*4 2,371 2,371 (262) (262) Exercise of common stock options Excess tax benefits from stock-based compensation 829 829 Stock-based compensation and issuance of employee benefit plan stock 2,962 5 (1,837) 17,186 2,962 (985)4,91619,285 Balance as of December 31, 2016 477 Cumulative effect of a change iin accounting principle related to stock-based compensation Net income 687 3,033 687 3,033 501 Other comprehensive income Exercise of common stock options 501 Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31,2017 4,202 5 $ (1,837) S 21,389 $ (484) S 8,636 S 27,709 4,202 484 S See accompanying notes to consolidated financial statements For our cash, cash equivalents, or marketable securities, we measure the fair value of money market funds and equity d on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued securities base either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold any cash, cash equivalents, or marketable securities categorized as Level 3 assets as of December 31, 2016 and 2017 As part of entering into commercial agreements, we often obtain equity warrant assets giving us the right to acquire stock of other companies. As of December 31, 2016 and 2017, these warrants had a fair value of $223 million and $441 million, and are recorded within "Other assets" on our consolidated balance sheets. The related gain (loss) recorded in "Other income (expense), net" was $O million, $67 min, and $109 million in 2015, 2016, and 2017. These assets are primarily classified as Level 2 assets Cash and Cash Equivalents We classify all highly liquid instruments with an original maturity of three months or less as cash equivalents. Inventories Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category We provide Fulfillment by Amazon services in connection with certain of our sellers' programs. Third-party sellers maintain ownership of their inventory, regardless of whether fulfillment is provided by us or the third-party sellers, and therefore these products are not included in our inventories. We also purchase electronic device components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, we enter into agreements with contract manufacturers and suppliers for certain electronic device components. A portion of our reported purchase commitments arising from these agreements consists of firm, non-cancellable commitments. These commitments are based on forecasted customer demand. If we reduce these commitments, we may incur additional costs. We also have firm, non-cancellable commitments for certain products offered in our Whole Foods Market stores Accounts Receivable, Net and Other Included in "Accounts receivable, net and other" on our consolidated balance sheets are amounts primarily related to customers, sellers, and vendors. As of December 31,2016 and 2017, customer receivables, net, were S3.9 billion and $6.4 billion, seller receivables, net, were $661 million and S692 million, and vendor receivables, net, were $2.0 billion and $2.6 billion. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory. We estimate losses on receivables based on known troubled accounts and historical experience of losses incurred Receivables are considered impaired and written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for doubtful accounts was $189 million, $237 million, and S348 million as of December 31, 2015, 2016, and 2017. Additions to the allowance were $289 million, $451 million, and $626 million, and deductions to the allowance were $290 million, $403 million, and $515 million in 2015, 2016, and 2017. The allowance for loan losses related to our seller receivables was not material as of December 31,2016 and 2017 Internal-Use Software and Website Development Costs incurred to develop software for internal use and our websites are capitalized and amortized over the estimated useful life of the software. Costs related to design or maintenance of internal-use software and website development are expensed as incurred. For the years ended 2015, 2016, and 2017, we capitalized S642 million including S114 million of stock based compensation), $511 million (including $94 million of stock-based compensation), and S395 million (including $84 million of stock-based compensation) of costs associated with internal-use software and website development. Amortization of previously capitalized amounts was $635 million, S634 million, and S545 million for 2015, 2016, and 2017 Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation. Incentives that we receive from property and equipment vendors are recorded as a reduction in our costs. Property includes buildings and land that we own, along with 46 property we have acquired under build-to-suit, finance, and capital lease arrangements. Equipment includes assets such as furniture and fixtures, heavy equipment, servers and networking equipment, and internal-use software and website development. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, two years for assets such as internal-use software, three years for our servers, five years for networking equipment, five years for furniture and fixtures, and ten years for heavy equipment). Depreciation expense is classified within the corresponding operating expense categories on our consolidated statements of operations. Leases and Asset Retirement Obligations We categorize leases at their inception as either operating or capital leases. On certain of our lease agreements, we may receive rent holidays and other incentives. We recognize lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Additionally, incentives we receive are treated as a reduction of our costs over the term of the agreement. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the non-cancellable term of the lease We establish assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent we are involved in the construction of structural improvements or take construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, we assess whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If we continue to be the deemed owner, the facilities are accounted for as finance leases We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs. Goodwill We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In testing goodwill for impairment, we may elect to utlize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting units. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows. Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions We completed the required annual testing of goodwill for impairment for all reporting units as of April 1, 2017, and determined that goodwill is not impaired as the fair value of our reporting units substantially exceeded their book value. There were no triggering events identified from the date of our assessment through December 31, 2017 that would require an update to our annual impairment test. See "Note 4-Acquisitions, Goodwill, and Acquired Intangible Assets." Other Assets Included in "Other assets" on our consolidated balance sheets are amounts primarily related to acquired intangible assets, net of amortization; video and music content, net of amortization; long-term deferred tax assets; certain equity investments marketable securities restricted for longer than one year, the majority of which are attributable to collateralization of bank guarantees and debt related to our international operations; and equity warrant assets Video and Music Content We obtain video and music content for customers through licensing agreements that have a wide range of licensing provisions, which include both fixed and variable payment schedules. When the license fee for a specific movie, television, or music title is determinable or reasonably estimable and the content is available for streaming, we recognize an asset representing the fee and a corresponding liability for the amounts owed. We relieve the liability as payments are made and we amortize the asset to "Cost of sales" on a straight-line basis or on an accelerated basis, based on estimated usage patterns, which typically ranges from one to five years. If we are unable to reasonably estimate the cost per title, no asset or liability is recorded and licensing costs are expensed as incurred. We also develop original content. Capitalized production costs associated with our original content are limited by the amount of revenue we expect to earn, which results in a portion being 47 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31 2015 2016 2017 Net product sales Net service sales S79,268 S 94,665 $ 118,573 59,293 177,866 27,738 107,006 41,322 135,987 Total net sales Operating expenses Cost of sales Fulfillment Marketing Technology and content General and administrative Other operating expense, net 71,651 13,410 5,254 12,540 1,747 88,265 17,619 7,233 16,085 2,432 167 131,801 4,186 100 (484) 90 (294) 3,892 (1,425) (96) 111,934 25,249 10,069 22,620 3,674 214 173,760 4,106 202 (848) 346 (300) 3,806 (769 Total operating expenses 104,773 2,233 50 (459) (256) (665) 1,568 (950) (22) Operating income Interest income Interest expense Other income (expense), net Total non-operating income (expense) Income before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted-average shares used in computation of earnings per share 596 $ 1.28 S 1.25 $ 2,371 S 5.01 $ 4.90 $ 3,033 6.32 6.15 467 474 484 Basic 480 Diluted 477 493 See accompanying notes to consolidated financial statements Note 3-PROPERTY AND EQUIPMENT Property and equipment, at cost, consisted of the following (in millions) December 31 2016 2017 Gross property and equipment (1) Land and buildings Equipment and internal-use software (2) Other corporate assets Construction in progress 13,998 S 25,989 649 1,805 42,441 13,327 23,718 38,387 2,390 4,078 68,573 19,707 48,866 Gross property and equipment Total accumulated depreciation (1) Total property and equipment, net 29,114!$ (1) Excludes the original cost and accumulated depreciation of fully-depreciated assets (2) Includes internal-use software of $1.4 billion and $1.1 billion as of December 31, 2016 and 2017 Depreciation expense on property and equipment was $4.9 billion, S6.4 blion, and $8.8 billion which includes amortization of property and equipment acquired under capital leases of $2.7 billion, $3.8 billion, and $5.4 billion for 2015 2016, and 2017. Gross assets recorded under capital leases were $17.0 billion and $26.4 billion as of December 31, 2016 and 2017. Accumulated depreciation associated with capital leases was $8.5 billion and $13.4 billion as of December 31, 2016 and 2017 We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner, for accounting purposes, during the construction period. For buildings under build-to-suit lease arrangements where we have taken occupancy, which do not qualify for sales recognition under the sale-leaseback accounting guidance, we determined that we continue to be the deemed owner of these buildings. This is principally due to our significant investment in tenant improvements. As a result, the buildings are being depreciated over the shorter of their useful lives or the related leases' terms. Additionally, certain build-to-suit lease arrangements and finance leases provide purchase options. Upon occupancy, the long-term construction obligations are considered long-term finance lease obligations with amounts payable during the next 12 months recorded as "Accrued expenses and other." Gross assets remaining under finance leases were $2.9 billion and $5.4 billion as of December 31, 2016 and 2017. Accumulated depreciation associated with finance leases was $361 million and $635 million as of December 31,2016 and 2017 Note 4-ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS Acquisition Activity During 2015 and 2016, we acquired certain companies for an aggregate purchase price of $690 million and S103 million The primary reason for these acquisitions, none of which were individually material to our consolidated financial statements, was to acquire technologies and know-how to enable Amazon to serve customers more effectively On May 12, 2017, we acquired Souq Group Ltd. ("Souq"), an e-commerce company, for approximately $583 million, net of cash acquired, and on August 28, 2017, we acquired Whole Foods Market, a grocery store chain, for approximately $13.2 billion, net of cash acquired. Both acquisitions are intended to expand our retail presence. During 2017, we also acquired certain other companies for an aggregate purchase price of $204 million. The primary reason for our other 2017 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively Acquisition-related costs were expensed as incurred and were not significant. The valuation of certain assets and liabilities in the Whole Foods Market acquisition is preliminary and subject to change AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 3, 2016 2017 ASSETS Current assets Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other 6,647 11,461 8,339 45,781 29,114 3,784 4,723 19,334 $20,522 10,464 16,047 13,164 60,197 48,866 13,350 8,897 83,402 $ 131,310 Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EUITY Current liabilities Accounts payable Accrued expenses and other Unearned revenu S25,309 S 34,616 18,170 5,097 57,883 24,743 20,975 13,739 4,768 43,816 7,694 12,607 Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value Authorized shares500 Issued and outstanding sharesnone Common stock, $0.01 par value Authorized shares5,000 Issued shares500 and 507 Outstanding shares_477 and 484 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings (1,837) 21,389 (484) 8,636 27,709 83,402 $131,310 (1,837 17,186 (985) 4,916 19,285 Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes to consolidated financial statements. AMAZON.COM, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions Year Ended December 31 2016 2015 2017 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash from operatin 14,557 15,890$ 596 3,033 g activities reciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs Stoc 8,116 2,975 11,478 4,215 k-based compensation Other operating expense, net Other expense (income), net Deferred income taxes 155 250 81 292) (29) 246) Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Unearned revenue (2,187) (1,755) 4,294 1,426) (3,367) (3,583) (4,786) 1,292 12,039 1,955 17,272 Net cash provided by (used in) operating activities 18,434 INVESTING ACTIVITIES Purchases of property and equipment, including internal-use software and website development Proceeds from property and equipment incentives Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities (7,804) (5,387) 798 (11,955) 1,897 (13,972) 9,988 (13,777) (27,819) 3,025 (4,091) (6,450) 4,733 (7,756) 9,876) Net cash provided by (used in) investing activities FINANCING ACTIVITIES Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of capital lease obligations Principal repayments of finance lease obligations (1,652) (2462) (121) (3,882) (374) 1,333 621 (354) (3,860) (147) (3,740) 212) 3,444 16,231 (1,372) (4,799) (200) 9,860 Net cash provided by (used in) financing activities Foreign currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest on long-term debt Cash paid for interest on capital and finance lease obligations Cash paid for income taxes, net of refunds Property and equipment acquired under capital leases Property and equipment acquired under build-to-suit leases 1,188 20,522 15,890 $ 325 S 328 153 4,717 544 957 9,637 3,541 See accompanying notes to consolidated financial statements