Stockholders
Equity
Equity
As of January 1, 2022, a corporation had assets of $340,000 and liabilities of $120,000. During 2022, assets increased $45,000 and liabilities increased $15,000.
Required:
Calculate stockholders' equity at December 31, 2022.
Stockholders' equity. $250,000
Bakersfield Corporation sold land costing $40,000 for $39,000. Which of the following is correct if the land was a component of property and equipment on the balance sheet?
A) Revenues are debited for $39,000.
B) Cost of goods sold is credited for $40,000.
C) Loss on sale of land is debited for $1,000.
D) Income from operations increases $1,000.
C) Loss on sale of land is debited for $1,000.
Melrose Corporation has provided the following account balances:
Cash $95,000
S/T Investments. $10,000
A/R $120,000
Supplies. $15,000
L/T Notes Rec $5,000
Equipment $240,000
Factory Building. $450,000
Intangible Assets. $15,000
A/P $75,000
Accrued Liabilities Payable. $10,000
S/T Notes Payable. $35,000
L/T Notes Payable. $230,000
Common Stock. $450,000
R/E. $150,000
What is Melrose's current ratio?
A) 2.00
B) 2.17
C) 2.71
D) 1.00
A) 2.00
With regard to relationships among financial statements, which of the following is true?
A) The results of the statement of stockholders' equity affect the income statement.
B) The income statement affects the results of the statement of stockholders' equity.
C) The statement of cash flows affects the income statement.
D) The results of the statement of cash flows affect the statement of stockholders' equity.
B) The income statement affects the results of the statement of stockholders' equity.
Which of the following is primarily responsible for the information provided in the financial statements?
A) Chief Executive Officer
B) External Auditors
C) Board of Directors
D) Internal Accounting Staff
A) Chief Executive Officer
Promenade Company’s retained earnings decreased $7,500 last year and its assets decreased $6,500. Promenade declared a $39,500 cash dividend during the year. What was last year's net income?
A) $38,500
B) $53,500
C) $32,000
D) $40,500
C) $32,000
At the end of June, which of the following statements is true when Pool Party Planners performed services in June amounting to $7,000 for customers who paid the cash in May?
A) The cash account was debited for $7,000.
B) Accounts receivable was credited for $7,000.
C) Unearned revenue was debited for $7,000.
D) Income from operations was not changed by providing these services.
C) Unearned revenue was debited for $7,000.
Which of the following statements does not properly describe the current ratio?
A) It measures the ability of a firm to pay its debts in the short run.
B) It is current assets divided by current liabilities.
C) It is a measure of a firm's short-run liquidity.
D) It measures a firm's ability to pay its long-term debts as they mature.
D) It measures a firm's ability to pay its long-term debts as they mature.
The declaration of a $5,000 dividend by JLH Company would be reported on which of JLH's financial statements?
A) The income statement only
B) The statement of stockholders' equity
C) The balance sheet only
D) The statement of cash flows
B) The statement of stockholders' equity
Which of the following best describes the purpose of an audit?
A) To prove the accuracy of an entity's financial statements.
B) To lend credibility to an entity's financial statements.
C) To audit every transaction that an entity entered into.
D) To establish that a corporation's stock is a sound investment.
B) To lend credibility to an entity's financial statements.
During 2022, Well Corporation’s assets decreased $5,500 and liabilities increased $17,300. Well's stockholders' equity at December 31, 2022 was $211,500. What amount was stockholders' equity at January 1, 2022?
A) $234,300
B) $188,700
C) $199,700
D) $223,300
A) $234,300
Mama June Pizza Company determined that dough, sauce, cheese and other ingredients costing $8,700 were used to make pizzas during July. Which of the following statements is false with respect to the use of the ingredients?
A) Cost of goods sold was debited for $8,700.
B) Operating expenses increased $8,700.
C) Income from operations decreased $8,700.
D) The Supplies account was debited for $8,700.
D) The Supplies account was debited for $8,700.
Which of the following transactions would result in a decrease in the current ratio?
A) Collection of cash from an account receivable
B) Selling shares of stock to stockholders in exchange for cash
C) Purchasing a delivery vehicle by signing a long-term note payable
D) Purchasing land by paying cash
D) Purchasing land by paying cash
Which of the following accounts does not have a credit balance?
A) Gain on sale of land
B) Interest revenue
C) Unearned revenue
D) Rent expense
D) Rent expense
The following information has been provided by Flatiron Company for the year ended December 31, 2022:
Net income was $71,000;
Income tax expense was $47,000;
Dividends declared and paid totaled $7,500;
Interest expense was $8,700;
Loss on sale of plant assets was $15,000;
Operating expenses for rent, wages, and insurance totaled $91,000;
Cash collected from customers was $220,000.
Required:
Calculate Flatiron's income from operations.
$126,700
Sierra Company has provided the following data:
2022 revenues were $140,000.
2022 expenses were $70,240.
Dividends declared and paid by Moss during 2022 totaled $25,120.
Total assets on December 31, 2022 were $363,200.
Total stockholders' equity on December 31, 2022 was $212,800.
Common stock on December 31, 2022 was $148,800.
Required:
Calculate the beginning retained earnings balance.
Beginning retained earnings = $19,360
Which of the following statements is false when Mama June Pizza Company paid $47,000 cash on accounts owed to suppliers?
A) The cash account was credited for $47,000.
B) Accounts payable was debited for $47,000.
C) Supplies expense was increased by $47,000.
D) Income from operations was not changed by the payment to the suppliers.
C) Supplies expense was increased by $47,000.
Net revenues $3787.2
Cost of goods sold $1674.0
Gross profit $2113.2
Operating expenses $2217.5
Income (loss) from operations ($104.3)
Nonoperating income (loss). ($121.7)
Income (loss) before taxes. ($226.0)
Income tax (expense)/benefit. $81.4
Net Income/(Loss). ($144.6)
Compute net profit margin
(3.8%)
Which of the following statements regarding the balance sheet is false?
A) Buildings and equipment are reported at book value.
B) Assets are reported in the order of liquidity.
C) Current liabilities are obligations to be paid with current assets.
D) The balance sheet reflects balances for a period of time.
D) The balance sheet reflects balances for a period of time.
On December 31, 2023, Beaver Company's revenue is $600,000 and expenses total $320,000 before consideration of the following:
Accrued wages total $22,000;
Accrued revenues total $72,000;
Depreciation expense is $34,000;
Rental revenue of $18,000 was earned; the rent from a tenant was initially recorded by Bates as unearned rent revenue;
The income tax rate is 40% of income before income taxes.
What is Beaver's net income after consideration of the above information?
A) $188,400
B) $314,000
C) $280,000
D) $177,600
A) $188,400
Eagle Crest Company has provided the following information for its recent year of operation:
The common stock account balance at the beginning of the year was $60,000 and the year-end balance was $75,000.
The additional paid-in capital account balance increased $7,500 during the year.
The retained earnings balance at the beginning of the year was $225,000 and the year-end balance was $273,000.
Net income was $78,000.
How much did Eagle Crest sell its common stock for during the year?
A) $15,000
B) $7,500
C) $22,500
D) $82,500
C) $22,500
Which of the following accounts would most likely not require an adjusting entry at year-end?
A) Unearned subscription revenue
B) Office supplies
C) Cash
D) Prepaid rent
C) Cash
Morning View Company's 2023 sales revenue was $160,000 and 2022 sales revenue was $144,000. Morning View's total assets as of December 31, 2023 were $120,000 and total assets as of January 1, 2023 were $104,000. What is Morning View's 2023 total asset turnover ratio?
A) 1.48
B) 1.33
C) 1.36
D) 1.43
D) 1.43
Which of the following statements is correct?
A) Balance sheet accounts are permanent accounts and do not retain their balances from one period to the next.
B) Balance sheet accounts are temporary accounts and do retain their balances from one period to the next.
C) Income statement accounts are permanent accounts and do retain their balances from one period to the next.
D) Income statement accounts are temporary accounts and do not retain their balances from one period to the next.
D) Income statement accounts are temporary accounts and do not retain their balances from one period to the next.
Emiline Company records purchases of office supplies in the Office supplies account and adjusts the account balance at the end of the period. Emiline’s Office supplies account had a $10,000 balance on January 1, 2023. A count of office supplies on hand at December 31, 2023 revealed $4,000 of supplies. During the year Emiline made purchases of supplies totaling $69,000. When the adjusting entries are prepared on December 31, 2023, what is the amount Emiline will record for Office supplies expense?
A) $55,000
B) $75,000
C) $83,000
D) $63,000
B) $75,000