21.Which one of the following groups of accounts contains only liabilities?
a.Accounts payable, retained earnings, notes payable.
b.Supplies expense, cost of goods sold, interest expense.
c.Wages payable, mortgage payable, taxes payable.
d.Contributed capital, accounts payable, retained earnings.
22.When an entrepreneur wishes to start a business, capital must be attracted in the form of:
a.net income.
b.cost of goods sold.
c.operating activities.
d.equity or debt financing.
23.If the beginning and ending balances in retained earnings are $13,000 and $10,000, respectively, and dividends during the year are $10,000, then net income for the year is:
a.$14,000.
b.$7,000.
c.$18,000.
d.$32,000.
24.Kelly Company has total assets, liabilities, and shareholders’ equity of $30,000, $17,000, and $13,000, respectively at the beginning of 2010. If Kelly reports revenues of $130,000, expenses of $85,000, and pays dividends of $30,000, how much is shareholders’ equity at the end of 2010?
a.$28,000
b.$53,000
c.$44,000
d.Not enough information to determine.
25.Sanchez Corporation has total assets, current liabilities, and long-term liabilities of $38,000, $2,000, and $13,000, respectively. If Sanchez purchases equipment for $4,000 for cash, how much would shareholders’ equity be?
a.$23,000
b.$10,000
c.$24,000
d.$11,000
26.The acquisition of equity and debt financing is considered:
a.a financing activity.
b.net income.
c.an investing activity.
d.an operating activity.
27.Which one of the following is considered an operating activity?
a.Payment to a vendor for supplies.
b.Purchase of company trucks for cash.
c.Payment of dividends to shareholders.
d.Issuing stock to investors.
28.Smith Corp. earned $200,000 profit during 2010. On which financial statement(s) will the exact dollar amount of the profit be clearly stated?
a.Statement of shareholders’ equity and income statement.
b.Income statement only.
c.Balance sheet and income statement.
d.Statement of shareholders’ equity, income statement, and the balance sheet.
29.On which financial statements will you find a company’s financial position at a specific point in time?
a.All financial statements combined.
b.Income statement and balance sheet.
c.Balance sheet and statement of shareholders’ equity.
d.Balance sheet only.
30.Why are liabilities separated into current and long-term?
a.Users want to know which amounts will be paid using current assets.
b.Because current and long-term classifications are just common sense.
c.This format helps a company determine how much profit was made.
d.The SEC requires companies to do so.