Common Stock = $6,900; Revenue = $14,800; Dividends = $1,700; Beginning Retained Earnings = $4,700; Ending Retained Earnings = $8,900.
Based on this information, the amount of expenses on Calloway's income statement was
$500.
$4,200.
$11,600.
$8,900.
Beginning retained earnings + Revenue − Expenses − Dividends = Ending retained earnings
$4,700 + $14,800 − Expenses − $1,700 = $8,900
Expenses = $8,900
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Learning Objective: 01-10 Record business events using a horizontal
financial statements model.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?;
Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500.
Based on this information, the amount of expenses on Calloway's income statement was:
$18,500.
$13,000.
$16,500.
$10,000.
Beginning retained earnings + Revenue − Expenses − Dividends = Ending retained earnings
$3,500 + $22,000 − Expenses − $1,500 = $7,500
Expenses = $16,500
References
Multiple Choice Learning Objective: 01-04 Show
how business events affect the
accounting equation.
Difficulty: 3 Hard Learning Objective: 01-07
Prepare an income statement, a
statement of changes in
stockholders equity, and a
balance sheet.
51.
Award: 1.00 point
52.
Award: 1.00 point
53.
Award: 1.00 point
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $24,000; Liabilities = ?;
Common Stock = $5,400; Revenue = $11,800; Dividends = $950; Beginning Retained Earnings = $3,950; Ending Retained Earnings = $7,400.
The amount of liabilities reported on the end-of-period balance sheet was:
$18,600.
$14,650.
$16,600.
$11,200.
Assets = Liabilities + Common Stock + Ending Retained Earnings
$24,000 = Liabilities + $5,400 + $7,400
Liabilities = $11,200
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-07 Prepare an income statement, a
statement of changes in stockholders equity, and a balance sheet.
The year-end financial statements of Calloway Company contained the following elements and corresponding amounts: Assets = $50,000; Liabilities = ?;
Common Stock = $15,000; Revenue = $22,000; Dividends = $1,500; Beginning Retained Earnings = $3,500; Ending Retained Earnings = $7,500.
The amount of liabilities reported on the end-of-period balance sheet was:
$27,500.
$31,500.
$35,000.
$42,500.
Assets = Liabilities + Common Stock + Ending Retained Earnings
$50,000 = Liabilities + $15,000 + $7,500
Liabilities = $27,500
References
Multiple Choice Difficulty: 2 Medium Learning Objective: 01-07 Prepare an income statement, a
statement of changes in stockholders equity, and a balance sheet.
Which of the following financial statements provides information about a company as of a specific point in time?
Income statement
Balance sheet
Statement of cash flows
Statement of changes in stockholders' equity
The balance sheet provides information about a company as of a specific point in time, the other three statements provide information about a period of time
such as a month, a quarter, or a year.
References
Multiple Choice Difficulty: 1 Easy Learning Objective: 01-07 Prepare an income statement, a
statement of changes in stockholders equity, and a balance sheet.
54.
Award: 1.00 point
55.
Award: 1.00 point
Kelly Company experienced the following events during its first accounting period.
(1) Issued common stock for $10,000 cash.
(2) Earned $8,000 of cash revenue.
(3) Paid $1,000 cash to purchase land.
(4) Paid cash dividends amounting to $500.
(5) Paid $4,400 of cash expenses.
Based on this information, what is the amount of net income?
$2,100
$2,600
$3,600
$5,600
Net income = Revenues of $8,000 − Expenses of $4,400 = $3,600. Expenses are economic sacrifices incurred to produce revenue. In this case, the company’s
sacrifice was a decrease in assets (cash). Note that dividends are not expenses. Dividends are not paid in order to produce revenue. Instead they are transfers