1. Which of the following equations is correct?
a. Dividends = Net income - Change in Retained Earnings
b. Dividends = Net income + Change in Retained Earnings
c. Dividends = Change in Retained earnings - Net income
d. none of the above
2. Net working capital can be referred to as:
a. total assets minus current liabilities
b. current assets minus total liabilities
c. cash minus current liabilities
d. current assets minus current liabilities
3. When an account is determined to be uncollectible, "writing off" the bad debt usually involves:
a. reducing the receivables balance and the bad debt reserve by the amount of the account
b. writing a letter to the customer demanding payment
c. "expensing" the amount deemed uncollectible
d. all of the above
4. Three years ago a machine was purchased for $5,000. Assuming a ten-year life and straight line depreciation with a no salvage value, which of the following will appear on the income statement and balance sheet respectively after four years?
a. depreciation expense of $2,000, accumulated depreciation of $2,000.
b. depreciation expense of $500, accumulated depreciation of $2,000.
c. accumulated depreciation of $2,000, depreciation expense of $500.
d. accumulated depreciation of $500, depreciation expense of $2,000.
e. depreciation expense of $1,500, accumulated depreciation of $500.