Question 1

Given the information below about Thomas Corporation,what was the amount of dividends the company paid in the current period? $$\begin{array} { | l | r | } 
\hline \text { Beginning retained earnings } & \$ 54,000 \
\hline \text { Ending retained earnings } & \$ 110,000 \
\hline \text { Decrease in cash } & \$ 10,000 \
\hline \text { Net income } & \$ 84,000 \
\hline \text { Change in stockholders' equity } & \$ 15,000 \
\hline
\end{array}$$

Accepted Answer

The amount of dividends paid can be calculated using the formula: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings. Rearranging the formula to solve for dividends gives: Dividends = Beginning Retained Earnings + Net Income - Ending Retained Earnings. Substituting the given values: Dividends = $54,000 + $84,000 - $110,000 = $28,000.

Question 2

Net income (loss)appears in which two financial statements?

Accepted Answer

Net income (loss) is reported on the income statement as the difference between revenues and expenses, and it also appears on the statement of stockholders' equity as a component of retained earnings, which is the cumulative result of all past net income (loss) transactions. It does not appear on the balance sheet directly.

Question 3

Nina Corp.had the following net income (loss)the first three years of operation: $7,100, ($1,600),and $3,600.If the Retained Earnings balance at the end of year three is $1,100,what was the total amount of dividends paid over these three years?

Accepted Answer

The total net income over three years is $7,100 - $1,600 + $3,600 = $9,100. The retained earnings at the end of year three is $1,100. Therefore, the dividends paid must be $9,100 - $1,100 = $8,000.

Question 4

Retained earnings at the end of the year is calculated using:

Accepted Answer

Retained earnings at the end of the year is calculated by adding net income to the beginning retained earnings and subtracting any dividends paid to shareholders during the year. Therefore, choice A is the correct option as it includes these three factors in the calculation. Choices B and C are incorrect as they do not include net income, which is a crucial component in determining retained earnings.

Question 5

Which of the following statements regarding financial reports is not correct?

Accepted Answer

A statement of stockholders' equity reports changes in the stockholders' equity accounts, including common stock and retained earnings, as well as any dividends issued. It does not report revenues or net income.

Question 6

Consider the following account balances of the Shattuck Law Firm at the end of the year: How many of these accounts would appear in Shattuck's year-end income statement?
$$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & \$ 4,400 \
\hline \text { Salaries Expense } & 12,800 \
\hline \text { Cash } & 1,700 \
\hline \text { Common Stock } & 2,400 \
\hline \text { Service Revenue } & 8,300 \
\hline \text { Supplies } & 4,300 \
\hline \text { Retained Earnings } & 1,100 \
\hline \text { Utilities Expense } & 5,000 \
\hline
\end{array}$$

Accepted Answer

The income statement includes revenues and expenses. Here, "Salaries Expense," "Service Revenue," and "Utilities Expense" would appear in the income statement.

Question 7

Which one of the following statements regarding financial reports is correct?

Accepted Answer

The statement of stockholders' equity updates the balances of common stock and retained earnings for related transactions during the year. The balance sheet classifies assets by liquidity, not operating, investing, and financing activities. The income statement shows a company's revenues and expenses, not resources and claims to those resources.

Question 8

On January 1,Gucci Brothers Inc.started the year with a $492,000 balance in Retained Earnings and a $605,000 balance in Common Stock.During the year,the company reported net income of $92,000,paid a dividend of $15,200,and issued more common stock for $27,500.What is total stockholders' equity at the end of the year?

Accepted Answer

The formula for calculating total stockholders' equity is:
Total Stockholders' Equity = Retained Earnings + Common Stock + Additional Paid-in Capital
Given in the problem:
Retained Earnings = $492,000
Common Stock = $605,000
Net Income = $92,000
Dividend Paid = $15,200
Additional Common Stock issued = $27,500
Calculate Additional Paid-in Capital
Additional Paid-in Capital = Additional Common Stock issued - Par Value of Common Stock
Additional Paid-in Capital = $27,500 - $605,000 = -$577,500
As the value is negative, it indicates that there was a discount on the issue of stock.
Now, let's calculate Total Stockholders' Equity:
Total Stockholders' Equity = Retained Earnings + Common Stock + Additional Paid-in Capital
Total Stockholders' Equity = $492,000 + $605,000 + (-$577,500)
Total Stockholders' Equity = $519,500
Therefore, the total stockholders' equity at the end of the year is $1,201,300 (option C).

Question 9

DW has an ending Retained Earnings balance of $51,100.If during the year DW paid dividends of $4,300 and had net income of $22,500,then what was the beginning Retained Earnings balance?

Accepted Answer

Beginning Retained Earnings = Ending Retained Earnings - Dividends Paid + Net Income
Beginning Retained Earnings = $51,100 - $4,300 + $22,500
Beginning Retained Earnings = $69,300
Therefore, the beginning Retained Earnings balance was $32,900.

Question 10

Sooner Company had a net income of $8,000,$5,000,$12,000,and $10,000 over the first four years of the company's existence.If the average annual amount of dividends paid over the last four years is $3,000,what is the ending retained earnings balance?

Accepted Answer

The total net income over the four years is $8,000 + $5,000 + $12,000 + $10,000 = $35,000. The total dividends paid over the four years is $3,000 * 4 = $12,000. Therefore, the ending retained earnings balance is $35,000 (total net income) - $12,000 (total dividends paid) = $23,000.

Question 11

Aikman Company has paid dividends of $2,410,$0,$1,570 and $1,060 over the first four years of the company's existence.If Retained Earnings after year four has an ending balance of $9,700,what is the average annual amount of net income (loss)over the past four years for Aikman?

Accepted Answer

The total dividends paid over four years is $2,410 + $0 + $1,570 + $1,060 = $5,040. If the ending balance of Retained Earnings is $9,700, the total amount of net income over four years is the sum of Retained Earnings and total dividends paid, which is $9,700 + $5,040 = $14,740. The average annual amount of net income over four years is $14,740 / 4 = $3,685.

Question 12

The ending Retained Earnings balance of Boomer Inc.decreased by $1.0 million from the beginning of the year.The company declared a dividend of $5.4 million during the year.What was the net income for the year?

Accepted Answer

The answer of The ending Retained Earnings balance of Boomer...

Question 13

Which of the following items is reported in the statement of stockholders' equity?

Accepted Answer

The statement of stockholders' equity reports changes in the company's equity accounts, such as common stock, retained earnings, and any additional paid-in capital. Net income is a component of retained earnings, which is reported in this statement. Total assets and total expenses are reported in the balance sheet and income statement, respectively.

Question 14

Expenses are shown in which of the following statements?

Accepted Answer

Expenses are typically shown on the income statement, which reflects a company's revenues and expenses over a specific time period (such as a quarter or year). The statement of cash flows and balance sheet can also provide information on a company's expenses, but they do not typically present expenses in as much detail as the income statement.

Question 15

The financial statement that represents the accounting equation is the:

Accepted Answer

The balance sheet represents the accounting equation (Assets = Liabilities + Equity) and provides information on a company's financial position at a specific point in time. The income statement and statement of cash flows do not directly represent the accounting equation.

Question 16

The equation best describing the balance sheet is:

Accepted Answer

The equation Assets = Liabilities + Stockholders' Equity represents the fundamental accounting equation, which shows that a company's assets (what it owns) are equal to its liabilities (what it owes) plus its stockholders' equity (the residual interest in the assets after deducting the liabilities). This equation is the basis for preparing a company's balance sheet.

Question 17

For the past five years,Mookie Consulting Services reported the following annual net income and dividend amounts: If Mookie had Retained Earnings of $88,000 at the end of year 5,what was the company's Retained Earnings at the beginning of Year 1?
$$\begin{array} { | l | r | r | } 
\hline \text { Year } & \text { Net Income } & \text { Dividends } \
\hline 1 & \$ 22,000 & \$ 2,000 \
\hline 2 & 17,000 & 2,000 \
\hline 3 & 9,000 & 1,000 \
\hline 4 & 14,000 & 3,000 \
\hline 5 & 25,000 & 4,000 \
\hline
\end{array}$$

Accepted Answer

Retained Earnings at the beginning of Year 1 = Retained Earnings at the end of Year 5 - Net Income for Years 1-5 + Dividends for Years 1-5= $88,000 - $22,000 - $17,000 - $9,000 - $14,000 - $25,000 + $2,000 + $2,000 + $1,000 + $3,000 + $4,000= $13,000

Question 18

Given the information below about David Corporation,what was the amount of dividends the company paid in the current period?

Accepted Answer

The information necessary to determine the amount of dividends paid by David Corporation is missing from the question. However, based on the options provided and assuming this question is a follow-up to a scenario with details about the company's financials, the correct answer would typically involve analyzing changes in retained earnings, net income, and possibly other equity transactions. Without specific details, it's not possible to provide a detailed explanation.

Question 19

Which of the following accounts appears in the statement of stockholders' equity?

Accepted Answer

The statement of stockholders' equity includes information related to the company's equity accounts, such as common stock, retained earnings, and any additional paid-in capital. Accounts payable and accounts receivable are not equity accounts and therefore would not appear in the statement of stockholders' equity.

Question 20

Which of the following items would not appear in an income statement?

Accepted Answer

Accounts Payable is a liability account and it would appear in a balance sheet, not an income statement. Delivery Expense and Service Revenue are both income statement items.

Quiz 1: A Framework for Financial Accounting

Net income (loss) appears in which two financial statements?

Nina Corp.had the following net income (loss) the first three years of operation: $7,100, ($1,600) ,and $3,600.If the Retained Earnings balance at the end of year three is $1,100,what was the total amount of dividends paid over these three years?