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Exam 1: Financial Statements and Business Decisions

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Question 61

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Larson Company ends its recent year of operations with $3,500,000 in retained earnings. During the year Larson's net income exceeded its dividend declarations by $200,000. Larson's dividend declarations were $25,000 greater than the dividend payments. How much was Larson Company's beginning retained earnings?

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Question 62

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During 2014, Canton Company's assets increased $95,500 and the liabilities decreased $17,300. Canton Company's stockholders' equity at December 31, 2014 was $211,500. What amount was stockholders' equity at January 1, 2014?

A) $98,700.
B) $324,300.
C) $133,300.
D) $289,700.

E) All of the above
F) C) and D)

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Question 63

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The accounting equation states that Assets = Liabilities + Stockholders' Equity.

Alfred Company manufactures men's clothing. During 2014, the company reported the following items that affected cash. Indicate whether each of these items is a cash flow from operating activities (O), investing activities (I), or financing activities (F). $\begin{array} { | l | l | } \hline \text { Purchased equipment by paying cash: } & \\\hline \text { Collected cash on account from customers: } & \\\hline \text { Paid dividends to stockholders: } & \\\hline \text { Paid cash for supplies: } & \\\hline \text { Paid suppliers for fabric: } & \\\hline \text { Borrowed money from bank on a note payable: } & \\\hline \text { Paid interest to bank on the note payable: } & \\\hline \text { Paid wages to employees: } & \\\hline \text { Sold shares of common stock to new stockholders: } & \\\hline\end{array}$

During the fiscal year ended 2014, a company had revenues of $400,000, cost of goods sold of $280,000, and an income tax rate of 30 percent on income before income taxes. What was the company's 2014 net income?

Which of the following statements is correct?

Which private sector body was given the primary responsibility to determine detailed auditing standards?

The financial statement that shows an entity's economic resources and claims against those resources is the balance sheet.

Which of the following equations is the balance sheet equation?

Why does a company hire independent auditors?

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 $9,600. 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?

Which of the following has the legal authority to determine financial reporting in the United States?

Which of the following statements is true about a sole proprietorship?

At the beginning of 2014, a corporation had assets of $270,000 and liabilities of $160,000. During 2014, assets increased $25,000 and liabilities increased $5,000. What was stockholders' equity on December 31, 2014?

Moss Company has provided the following data: 2014 revenues were $87,500. 2014 expenses were $43,900. Dividends declared and paid by Moss during 2014 totaled $15,700. Total assets on December 31, 2014 were $227,000. Total stockholders' equity on December 31, 2014 was $133,000. Common stock on December 31, 2014 was $93,000. What was the beginning retained earnings balance?

In what order would the items on the balance sheet appear?

On January 1, 2014, Miller Corporation had retained earnings of $8,000,000. During 2014, 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, 2014?

Stockholders' equity on the balance sheet includes common stock and retained earnings.

The primary responsibility for the content of the financial statements lies with the external auditor.

The statement of stockholders' equity explains the change in the retained earnings balance caused by stockholder investments and dividend declarations.