21) An investor wishing to assess the reasons for a change in retained earnings over a period of a year would probably examine the:
A) statement of cash flows and the income statement.
B) income statement only.
C) balance sheet.
D) statement of retained earnings.
22) A potential investor interested in predicting the earnings of a company in the future should examine the:
A) Balance Sheet only.
B) Income Statement only.
C) Statement of Retained Earnings.
D) statement of Retained Earnings and Balance Sheet.
23) Which statement(s) reports the revenues, gains, expenses, and losses of an entity?
A) Balance sheet
B) Statement of cash flows and income statement
C) Statement of retained earnings and statement of operations
D) Income statement
24) Which financial statement is dated at the moment in time when the accounting period ends?
A) Balance sheet
B) Income statement
C) Statement of retained earnings and income statement
D) Statement of cash flows
25) The income statement:
A) is not dated.
B) must cover only a month in time.
C) covers a defined period of time.
D) reports the results of operations since the inception of the business.
26) An example of an operating expense is:
A) cost of goods sold.
B) sales returns.
C) sales commissions paid to employees.
D) interest expense.
27) Which is the CORRECT order for items to appear on the income statement?
A) Revenues, operating expenses, net income
B) Cost of goods sold, revenues, net income
C) Revenues, net income, operating expenses
D) Interest expense, revenues, operating income
28) The portion of net income that the company has kept over a period of years and not used for dividends is called:
A) common stock.
B) retained earnings.
C) revenue.
D) gross profit.
29) A company sells travel mugs online for $9. They purchase the mugs for $4 and charge the customers $2 for shipping and handling. Cost of goods sold per mug is:
A) $0.
B) $2.
C) $4.
D) $6.
30) A net loss occurs when:
A) not enough cash exists.
B) total revenues exceed total expenses.
C) total expenses and losses exceed total revenues and gains.
D) total revenues and dividends exceed total expenses and losses.