Task: At the beginning of 2006 Smith Co. had the following account balances:
Assets $10,000
Liabilities 6,000
Common stock 3,000
Retained Earnings 1,000
During 2006 the following cash events occurred:
a. Provided services to customers for $8,000.
b. Repaid $2,000 of debt.
c. Owners invested an additional $3,000 in the business.
d. Incurred operating expenses of $5,000.
e. Dividends amounted to $1,000.
Problem 1) Smith's net income for 2006 was:
a. $1,000
b. $2,000
c. $3,000
d. $4,000
Problem 2) Total assets at the end of 2006 are:
a. $ 3,000
b. $13,000
c. $15,000
d. $18,000
Problem 3) Total liabilities at the end of 2006 are:
a. $ 0
b. $4,000
c. $6,000
d. $8,000
Problem 4) Retained earnings at the end of 2006 are:
a. $1,000
b. $2,000
c. $3,000
d. $4,000
Problem 5) The following amounts were drawn from the records of Smith Co.: Total Assets = $1,100; Common stock = $300; Retained Earnings = $200. Based on this information, total liabilities must be equal to:
a. $300
b. $600
c. $800
d. $900
Problem 6) Smith Co. purchased land for $2,000 cash. As a result of this event:
a. Cash flow from operating activities would decrease.
b. Cash flow from investing activities would increase.
c. Cash flow from financing activities would decrease.
e. Cash flow from investing activities would decrease.
Problem 7). Which of the following is a stockholders' equity item:
a. Property, Plant and Equipment
b. Accounts Payable
c. Inventory
d. Contributed Capital
Problem 8) Net Income is -
a. Assets minus Liabilities
b. Revenues minus Expenses
c. Contributed Capital minus Dividends
e. Stockholders' Equity minus Liabilities
Problem 9) The Smith Corp. has assets of $20,000 and stockholders' equity of $12,000. The amount of its liabilities is:
a. $8,000
b. $12,000
c. $20,000
e. $32,000
Problem 10) Smith Co sold merchandise for $500,000. The merchandise that it sold had a cost of $300,000. Smith Co has revenues of
a. $200,000
b. $300,000
c. $500,000
d. $800,000
Problem 11) Which of the following would appear in the cash flow from operations section of the statement of cash flows?
a. cash paid to suppliers and employees
b. cash paid to purchase equipment
c. cash paid on notes payable
d. cash paid for dividends
Problem 12) ___________ includes cash, equipment and inventory.
a. Stockholders' Equity
b. Net Income
c. Revenues
d. Assets