Multiple Choice 1. On which statement are assets, liabilities and equity reported? A) Balance sheet B) Income statement C) Statement of stockholders' equity D) Statement of cash flows 2. Which of the following items are in the balance sheet? (Select all that apply.) A) Inventory B) Operating expenses C) Account receivable D) Equipment E) Cash payments 3. How are the balance sheet and the statement of cash flows linked? A) By the cash balance B) By the amount of total retained earnings C) By the total shareholder equity D) By the amount of net income 4. What are probable future sacrifices called and how are they reported? A) Assets on the balance sheet B) Stockholders' equity on the balance sheet C) Dividends on the statement of stockholders' equity D) Liabilities on the balance sheet 5. Pearlman Industries recorded and paid $2,000 in wages. Which occurred? A) Current assets increase. B) Gross profit decreases. C) Retained earnings increases. D) Operating income decreases. 6. Net working capital is defined as: A) Assets - liabilities B) Current assets C) Current assets - Current liabilities D) Market value - Book value Use the following information to answer questions 7 and 8: On May 1