Identify the choice that best completes the statement or answers the question.
__C__ 1. Raymond Corporation reported the following information for the year ended December 31, 2012:
| Net income | $ 10,000 |
| Dividends | 6,000 |
| Retained earnings at December 31, 2012 | 25,000 |
What was the economic effect of the payment of Raymond’s dividends?
a. | The dividend reduced net income for 2012. |
b. | The dividend should be equal to net income if the company’s accounting equation is in balance. |
c. | The dividends reduce total retained earnings for the year. |
d. | The dividends must be paid whenever Raymond Corp. reports net income. |
__B__ 2. If a company has $152,000 of revenues, declares and pays $55,000 in dividends, and has net income of $89,000, how much were expenses for the year?
a. | $ 8,000 |
b. | $ 63,000 |
c. | $144,000 |
d. | Unable to determine the amount due to incomplete information. |
__C__ 3. T. Price Company has assets of $350,000, liabilities of $130,000, and retained earnings of $180,000. How much is total owners’ equity?
a. | $ 40,000 | c. | $ 220,000 |
b. | $ 170,000 | d. | $ 350,000 |
___B_ 4. The preparation of financial statements requires that the information be understandable
a. | Only to CPAs. |
b. | To those willing to spend the time to understand it. |
c. | Only to those who take an accounting course. |
d. | Only to financial analysts and brokers. |
__D__ 5. Which set of items below are current assets?
a. | Accounts receivable, net income, inventory, and dividends |
b. | Cash, accounts receivable, capital stock, and sales |
c. | Net income, cash, office supplies, and inventory |
d. | Cash, accounts receivable, inventory, and office supplies |
__B__ 6. For several years, Malcom Corporation has had a current ratio that was consistent with other companies in its industry. For the most recent year, Malcom’s current ratio... [continues]
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