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W Pols) For each multiple choice question select the one best answer and mark they on your Scantron form. 01. A local retail shop has

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W Pols) For each multiple choice question select the one best answer and mark they on your Scantron form. 01. A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate? A) Ability to raise capital for expansion B) Desire to limit the owner's personal liability. C) The prestige of operating as a corporation. D) The case in transferring shares of the corporation's stock. 02. External users want answers to all of the following questions except A) Is the company earning satisfactory income? B) Will the company be able to pay its debts as they come due? C) Will the company be able to afford employee pay raises this year? D) How does the company compare in profitability with competitors? 03. The primary purpose of the statement of cash flows is to report A) a company's investing transactions. B) a company's financing transactions C) information about cash receipts and cash payments of a company. D) the change in operating activities for the year. 04. In a study session, a classmate makes this statement "Dividends are listed as expenses on the income statement." What is your best response to this statement? A) I've been struggling with that concept and I feel that dividends should be shown on the balance sheet as assets. B) You are right. Revenues and expenses are shown on the income statement. Dividends are a cost of generating revenues and that makes them an expense. Why else would a corporation pay dividends? C) Dividends represent a portion of corporate profits that are paid to the shareholders. They belong on the retained earnings statement. D) Dividends are deducted from retained earnings on the balance sheet. 05. Finney Company began the year by issuing $80,000 of common stock for cash. The company recorded revenues of $740,000, expenses of $760,000, and paid dividends of $40,000. What was Finney's net income or loss for the year? A) $60,000 income. B) $60,000 loss. C) $20,000 loss. D) $40,000 income

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