____ 2. Which financial statement would you refer to in order to determine whether a company owed funds to creditors?

A. Balance Sheet B.Statement of Retained Earnings C.Income Statement D.Both the Balance Sheet and the Income Statement

____ 4. Walsh Company applies the consistency convention. What does this mean?

A. Walsh uses the same names for all its expenses as its competitors.

B. Walsh has selected particular accounting principles that can never be changed.

C. Walsh applies the same accounting principles each accounting period.

D. Walsh applies the same accounting principles as its competitors.

____ 7. A computer is purchased on credit by signing a 5-year note. Identify the effects on the accounting equation.

A. Assets increase and liabilities increase B.Assets increase and owners equity increases. C.Liabilities increase and owners equity decreases. DLiabilities decrease and assets decrease.

____ 10.Which one of the following is an example of an accrued liability?

A. Wages have been earned by employees, but have not been paid at the end of the period.

B. Equipment that will benefit several periods has been purchased.

C. An insurance policy that expires in a future period has been acquired.

D. Supplies are purchased and used over several months.

The accountant for Farly Corporation prepared the following list from the companys accounting records for the year ended December 31, 2014:

Sales Revenue $165,000 Cash $30,000

Accounts receivable $14,000 Selling expenses $44,000

Equipment $42,000 Common stock $17,000

Accounts Payable $12,000 Interest income $3,000

Salaries and wages expense $40,000 Cost of goods sold $51,000

Inventories $22,000 Prepaid expenses $2,000

Income taxes payable $5,000 Income taxes expense $18,000

Notes payable $20,000 Retained earnings ???

REQUIREMENTS:

Prepare an Income Statement for Farly Corporation for Year Ended December 31, 2014.

Prepare a Balance Sheet for Farly Corporation as of December 31, 2014.

What was the amount of Retained earnings for Farly Corporation at the end of 2014?