46) Lena Company has provided the following data for its 2019 operations (ignore income
taxes):
2019 revenues were $99,000.
2019 expenses were $47,800.
Dividends declared and paid during 2019 totaled $9,500.
Total assets at December 31, 2019 were $177,000.
Total liabilities at December 31, 2019 were $89,000.
Common stock at December 31, 2019 was $28,000.
Which of the following is correct?
A) 2019 net income was $41,700.
B) Total stockholders’ equity at December 31, 2019 was $236,000.
C) Retained earnings at December 31, 2019 were $60,000.
D) Retained earnings at December 31, 2019 were $41,700.
47) Lorenta Company has provided the following data (ignore income taxes):
2019 revenues were $117,300.
2019 expenses were $47,800.
Dividends declared and paid during 2019 totaled $9,500.
Total assets at December 31, 2019 were $177,000.
Total liabilities at December 31, 2019 were $89,000.
Common stock at December 31, 2019 was $28,000.
Which of the following is not correct?
A) 2019 net income was $69,500.
B) Total stockholders’ equity at December 31, 2019 was $88,000.
C) Total liabilities and stockholders’ equity at December 31, 2019 was $177,000.
D) Retained earnings on December 31, 2019 were $41,700.
48) Madrid Company has provided the following data (ignore income taxes):
2019 revenues were $77,500.
2019 net income was $33,900.
Dividends declared and paid during 2019 totaled $5,700.
Total assets at December 31, 2019 were $217,000.
Total stockholders’ equity at December 31, 2019 was $123,000.
Retained earnings at December 31, 2019 were $83,000.
Which of the following is not correct?
A) 2019 expenses were $43,600.
B) Total liabilities at December 31, 2019 were $94,000.
C) Retained earnings increased $33,900 during 2019.
D) Common stock at December 31, 2019 was $40,000.
49) Madrid Company has provided the following data (ignore income taxes):
2019 revenues were $77,500.
2019 net income was $33,900.
Dividends declared and paid during 2019 totaled $5,700.
Total assets at December 31, 2019 were $217,000.
Total stockholders’ equity at December 31, 2019 was $123,000.
Retained earnings at December 31, 2019 were $83,000.
Which of the following is correct?
A) 2019 expenses were $37,900.
B) Total liabilities at December 31, 2019 were $11,000.
C) Retained earnings increased $28,200 during 2019.
D) Common stock at December 31, 2019 was $206,000.
50) Which of the following is the amount of revenue reported on the income statement of a retail
company?
A) The cash collected from customers during the current period.
B) Both cash and credit sales for the period.
C) Cash sales for the period and collections from customers.
D) Cash sales and stockholders’ investments.
51) On January 1, 2019, Miller Corporation had retained earnings of $8,000,000. During 2019,
Miller reported net income of $1,500,000, declared dividends of $500,000, and issued common
stock for $1,000,000. What were Miller’s retained earnings on December 31, 2019?
A) $7,000,000.
B) $9,500,000.
C) $9,000,000.
D) $7,500,000.
52) What are the categories of cash flows that appear on a statement of cash flows?
A) Cash flows from investing, financing, and service activities.
B) Cash flows from operating, production, and internal activities.
C) Cash flows from financing, production, and growth activities.
D) Cash flows from operating, investing, and financing activities.
53) When would a company report a net loss on the income statement?
A) When revenues are less than the sum of expenses plus dividends during an accounting period.
B) If assets decreased during an accounting period.
C) If liabilities increased during an accounting period.
D) When expenses exceeded revenues for an accounting period.
54) Which of the following describes the amount of insurance expense reported on the income
statement?
A) The amount of cash paid for insurance in the current period.
B) The amount of cash paid for insurance in the current period less any unpaid insurance at the
end of the period.
C) The amount of insurance used up (incurred) in the current period to help generate revenue.
D) The amount of cash paid for insurance that is reported within the statement of cash flows.
55) Which of the following would immediately cause a change in a corporation’s retained
earnings?
A) Net income or net loss and declaration of dividends.
B) Declaration of dividends and issuance of common stock to new stockholders.
C) Net income and issuance of stock to new stockholders.
D) Declaration of dividends and purchase of new machinery.
56) Which of the following describes the operating activities section of a cash flow statement?
A) It provides information about how operations have been financed.
B) It provides information pertaining to dividend payments to stockholders.
C) It provides information with respect to a company’s ability to generate cash flows that are
directly related to earning income.
D) It provides the net increase or decrease in cash during the period.
57) Within which of the following would you find the inventory method(s) being used by a
business entity?
A) Balance sheet.
B) Income statement.
C) Notes to the financial statements.
D) Headings of the financial statements.
58) At the beginning of 2019, a corporation had assets of $270,000 and liabilities of $160,000.
During 2019, assets increased $25,000 and liabilities increased $5,000. What was stockholders’
equity at December 31, 2019?
A) $140,000.
B) $130,000.
C) $190,000.
D) $80,000.
59) During 2019, Canton Company’s assets increased $95,500 and the liabilities decreased
$17,300. Canton Company’s stockholders’ equity at December 31, 2019 was $211,500. What
amount was stockholders’ equity at January 1, 2019?
A) $98,700.
B) $324,300.
C) $133,300.
D) $289,700.
60) How are creditor and investor claims reported on a balance sheet?
A) The claims of creditors are liabilities and those of investors are assets.
B) The claims of both creditors and investors are liabilities, but only the claims of investors are
considered to be long-term.
C) The claims of creditors are reported as liabilities while the claims of investors are recorded as
stockholders’ equity.
D) The claims of creditors and investors are considered to be essentially equivalent.
61) In what order would the items on the balance sheet appear?
A) Assets, retained earnings, liabilities, and common stock.
B) Common stock, retained earnings, liabilities, and assets.
C) Assets, liabilities, common stock, and retained earnings.
D) Common stock, assets, liabilities, and retained earnings.
62) Which of the following would most likely increase retained earnings?
A) An increase in expenses.
B) An increase in revenues.
C) Declaring a cash dividend.
D) Issuing additional common stock.
63) A company’s retained earnings increased $375,000 last year and its assets increased
$973,000. The company declared a $79,000 cash dividend during the year. What was last year’s
net income?
A) $296,000.
B) $375,000.
C) $454,000.
D) $519,000.
64) Which of the following items is not reported as an expense on the income statement?
A) Interest expense.
B) Dividends paid.
C) Selling, general, and administrative expenses.
D) Cost of goods sold.
65) Which of the following has primary responsibility to develop Generally Accepted
Accounting Principles?
A) Financial Accounting Standards Board.
B) Company Executives.
C) Securities and Exchange Commission.
D) Public Company Accounting Oversight Board.
66) Which of the following has the legal authority to determine financial reporting in the United
States?
A) Financial Accounting Standards Board.
B) American Accounting Association.
C) Securities and Exchange Commission.
D) Public Company Accounting Oversight Board.
67) Which of the following is not reported as a liability on a balance sheet?
A) Income taxes payable.
B) Common stock.
C) Accounts payable.
D) Dividends payable.
68) Which of the following transactions increases both cash and net income?
A) Cash receipts from a bank loan.
B) Cash receipts from sale of common stock.
C) Cash receipts from customers for services provided.
D) Cash receipts from cost of goods sold.
69) Which of the following is not an alternate title for the financial statement that reports
revenues and expenses?
A) Income Statement.
B) Statement of Net Income.
C) Statement of Operations.
D) Statement of Income.
70) A calendar year reporting company preparing its annual financial statements should use the
phrase “At December 31, 2020” in the heading of which financial statements?
A) On all of the required financial statements.
B) On the income statement only.
C) On the income statement and balance sheet, but not the statement of cash flows.
D) On the balance sheet only.
71) Which of the following properly describes the impact on the financial statements when a
company borrows $20,000 from a local bank?
A) Net income increases $20,000.
B) Assets decrease $20,000.
C) Stockholders’ equity increases $20,000.
D) Liabilities increase $20,000.
72) Which of the following would not be reported in the operating activities section of a cash
flow statement?
A) Cash paid for dividends to stockholders.
B) Cash paid for interest expense.
C) Cash paid for employee wages.
D) Cash received from customers.
73) Which of the following would be reported in the financing activities section of a cash flow
statement?
A) Cash paid for dividends to stockholders.
B) Cash paid for interest expense.
C) Cash paid to acquire equipment.
D) Cash received from sale of investments.
74) Which of the following would be reported in the investing activities section of a cash flow
statement?
A) Cash received from customers.
B) Cash received from the issue of common stock.
C) Cash paid to repay a bank loan.
D) Cash paid to acquire common stock of another company.
75) Which of the following statements is correct?
A) The payment of a cash dividend reduces net income.
B) Cash received from issuing common stock to stockholders is reported as a financing activity
cash flow within the statement of cash flows.
C) Providing services to a customer on account does not impact net income.
D) The purchase of manufacturing equipment is reported within the statement of cash flows as a
financing activity.
76) Husky Company has provided the following information for its most recent year of
operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees for salaries totaled $32,100.
Cash received from selling Husky common stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid to suppliers totaled $12,500.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky’s cash flow from operating activities?
A) $47,600.
B) $44,700.
C) $41,400.
D) $37,200.
77) Husky Company has provided the following information for its most recent year of
operation:
Cash collected from customers totaled $89,300.
Cash borrowed from banks totaled $31,700.
Cash paid to employees for salaries totaled $32,100.
Cash received from selling Husky common stock to stockholders totaled $41,000.
Cash payments to banks for repayment of money borrowed totaled $7,500.
Cash paid to suppliers totaled $12,500.
Land costing $25,000 was sold for $25,000 cash.
Cash paid for dividends to stockholders totaled $3,300.
How much was Husky’s cash flow from financing activities?
A) $72,700.
B) $59,000.
C) $65,200.
D) $61,900.
78) Sparty Corporation has provided the following information for its most recent year of
operation:
Revenues earned were $97,000, of which $9,000 were uncollected at the end of the year.
Operating expenses incurred were $39,000, of which $7,000 were unpaid at the end of the year.
Dividends declared were $11,000, of which $3,000 were unpaid at the end of the year.
Income tax expense is $17,400.
What is the amount of net income reported on Sparty’s income statement?
A) $32,900.
B) $39,300.
C) $33,600.
D) $40,600.
79) Which of the following statements is correct?
A) Revenues are reported on the income statement regardless of whether the customer has paid
for the goods or services.
B) Expenses are reported on the income statement during the period they are paid for.
C) Net income includes a deduction for dividend payments made to stockholders.
D) Net income normally equals the net cash generated by operations.