21) Which of the following increases retained earnings?
A) issuance of stock
B) revenues
C) purchase of inventory
D) dividends
22) Mia Hero, Inc. had a retained earnings balance of $7,000 on December 31, 2011. For the year 2012, sales revenues are $15,000 and expenses are $13,000. If no dividend is declared or paid in 2012, retained earnings at December 31, 2012 equals ________.
A) $9,000
B) $10,000
C) $35,000
D) some other amount
23) Team Shirts, Inc. had the following balances on its balance sheet;
AssetsLiabilities
December 31, 2011$300,000$250,000
December 31, 2012$400,000$320,000
During 2012, Team Shirts had revenues of $500,000 and expenses of $420,000. No new stock was issued. The amount of dividends for 2012 was ________.
A) $130,000
B) $50,000
C) $10,000
D) $80,000
24) Team Shirts, Inc. had the following balances on its balance sheet;
AssetsLiabilities
December 31, 2011$500,000$300,000
December 31, 2012$700,000$400,000
During 2012, Team Shirts had revenues of $500,000, expenses of $420,000, and issued $20,000 of new stock. The amount of dividends for 2012 was ________.
A) $130,000
B) $50,000
C) $0
D) $60,000
25) Team Shirts, Inc. had the following balances on its balance sheet;
AssetsLiabilities
December 31, 2011$500,000$300,000
December 31, 2012$700,000$400,000
During 2012, Team Shirts issued $20,000 of new stock and paid $10,000 of dividends. The amount of net income for 2012 was ________.
A) $290,000
B) $310,000
C) $90,000
D) $10,000
26) Tim’s Tots, Inc.
September 30, 2012
Cash
$ 5,000
Accounts Payable
$3,200
Accounts receivable
$ 3,500
Notes payable
$6,500
Inventory
________
Common stock
$5,000
Equipment
$10,500
Retained earnings
$7,300
Total assets
________
Total liabilities & shareholders’ equity
________
What is the name of the financial statement above?
A) income statement
B) balance sheet
C) statement of cash flows
D) statement of changes in shareholders’ equity
27) Tim’s Tots, Inc.
September 30, 2012
Cash
$ 5,000
Accounts Payable
$3,200
Accounts receivable
$ 3,500
Notes payable
$6,500
Inventory
________
Common stock
$5,000
Equipment
$10,500
Retained earnings
$7,300
Total assets
________
Total liabilities & shareholders’ equity
________
Using the above financial statement, calculate the missing amount of Inventory.
A) $3,000
B) $19,000
C) $22,000
D) $1,500
28) The Mane Event, Inc. began by selling $200,000 of common stock to its owners in exchange for cash. The effect of this transaction on the accounting equation is;
A) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
Increase
No effect
Increase
No effect
B) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earning
Decrease
No effect
No effect
Decrease
C) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earning
No effect
Decrease
No effect
Increase
D) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
Increase
No effect
Increase
No effect
29) Daily Grind, Inc. began by selling $15,000 of common stock to its owners in exchange for cash. The effect of this transaction on the accounting equation is;
A) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
15,000 cash
No effect
No effect
15,000 revenue
B) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
15,000 cash
No effect
15,000 common stock
No effect
C) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
No effect
15,000 cash
15,000 cash
No effect
D) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
15,000 cash
15,000 cash
No effect
Increase
30) Mercy, Inc. purchased a truck for $50,000 cash. The effect of this transaction on the accounting equation is;
A) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
Increase
No effect
No effect
Increase
B) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
Decrease
No effect
No effect
Decrease
C) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
No effect
No effect
No effect
No effect
D) Total shareholders’ equity
Total assets
Total liabilities
Contributed capital
Retained earnings
Increase
No effect
Increase
No effect
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