1) The income statement presents a summary of the:

A) changes that occurred in the stockholders' equity of an entity

B) cash inflows and outflows of an entity

C) revenues and expenses of an entity for a specific time period

D) assets and liabilities of an entity

2) The income statement:

A) reports the results of operations since the inception of the business

B) covers a defined period of time

C) is not dated

D) may cover a period of time or only one day in time, like a snapshot photograph

3) Claims held by the stockholders of a corporation are alternately known as:

A) paid-in capital plus retained earnings

B) retained earnings

C) paid-in capital

D) earned income

4) Payables are classified as:

A) decreases in earnings

B) assets

C) increases in earnings

D) liabilities

5) Revenues are:

A) increases in retained earnings resulting from delivering goods or services to customers

B) decreases in retained earnings resulting from delivering goods or services to customers

C) decreases in assets resulting from delivering goods or services to customers

D) increases in liabilities resulting from delivering goods or services to customers

6) Expenses are:

A) increases in assets resulting from operations

B) decreases in retained earnings resulting from operations

C) increases in liabilities resulting from purchasing assets

D) increases in retained earnings resulting from operations

7) Revenues were $150,000, expenses were $70,000, and cash dividends were $30,000. What was the net income and the change in retained earnings for the period?

Net Income // Change in Retained Earnings

A) $80,000 // $80,000

B) $80,000 // $50,000

C) $50,000 // $50,000

D) $250,000 // $250,000

8) Common stock appears on the:

A) income statement

B) statement of cash flows

C) retained earnings statement

D) balance sheet

9) Depreciation is normally associated with which asset on the balance sheet?

A) accounts receivable

B) inventory

C) equipment

D) land

10) Which of the following transactions would increase assets?

I. Borrowed cash on a note payable, $50,000

II. Provided services on account, $6,000

III. Received cash from a customer as payment on account, $2,000

IV. Received a utility bill, $500

A) I and II

B) I and III

C) I, II, and III

D) All of these answers are correct.

Answer rating: 100% (QA)

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