21. Peck CompanyThe Peck Company reported the following items on its financial statements for the year ending December 31, 2012.
Sales$1,560,000Cost of sales$1,400,000
Selling, general andOther expense30,000
administrative expense40,000
Dividends10,000Income tax expense25,000
Refer to the information provided above for Peck Company. The Income Statement of Peck will report net income for the current year in the amount of: A. $ 55,000.B. $ 65,000.C. $ 85,000.D. $120,000.
22. Peck CompanyThe Peck Company reported the following items on its financial statements for the year ending December 31, 2012.
Sales$1,560,000Cost of sales$1,400,000
Selling, general andOther expense30,000
administrative expense40,000
Dividends10,000Income tax expense25,000
Refer to Peck Company. How much will be reported as retained earnings on its balance sheet at December 31, 2012, if this is the first year of operations? A. $45,000B. $55,000C. $85,000D. Not enough information is provided.
23. Ponzi CorporationPonzi Corporation reported the following information for the year ended December 31, 2012.
Net income$100,000
Dividends6,000
Retained earnings at December 31, 2012$120,000
Refer to the information provided above for Ponzi Corporation. What was the balance of retained earnings at January 1, 2012? A. $ 21,000B. $ 26,000C. $106,000D. $214,000
24. Ponzi CorporationPonzi Corporation reported the following information for the year ended December 31, 2012.
Net income$100,000
Dividends6,000
Retained earnings at December 31, 2012$120,000
Refer to the information provided above for Ponzi Corporation. What was the economic effect of the payment of Ponzi’s dividends? A. The dividend reduced net income for 2012.B. The dividend should be added to net income if the company’s accounting equation is in balance.C. The dividend reduced total retained earnings.D. The dividends must be paid whenever Ponzi Corporation reports net income.
25. Which of the following terms best describes a distribution of the net income of a corporation to its owners? A. Retained earningsB. DividendsC. Liquidation of assetsD. Revenue
26. You are a potential creditor and are concerned that a particular company you are ready to give a loan to might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? A. Balance sheetB. Income statementC. Statement of retained earningsD. Statement of cash flows
27. Which financial statement would you refer to in order to determine how many resources (assets) the company owns? A. Balance sheetB. Statement of retained earningsC. Income statementD. Statement of cash flows
28. Which one of the following events creates a liability for a business? A. An obligation to pay for goods purchased on credit from a supplierB. Inventories purchased for cashC. Amounts invested by the ownersD. Stock sold to the general public
29. Which of the following is a correct fundamental accounting equation? A. Assets + Liabilities = EquityB. Assets + Retained Earnings = EquityC. Assets + Equity = LiabilitiesD. Assets = Liabilities + Equity
30. On January 1, 2012, Blackstone Company reported assets of $1,000,000 and liabilities of $600,000. During 2012 assets decreased by $200,000 and Equity decreased $250,000. What is the amount of Equity on December 31, 2012. A. $650,000B. $150,000C. $400,000D. $800,000
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