Question

1. Which of the following would not represent a financing activity?
   1. Paying dividends to stockholders.
   2. An investment of capital by the owners.
   3. Borrowing money from a bank to purchase new equipment.
   4. Buying supplies.

2. The obligations and debts of a business are referred to as:
   1. equities.
   2. assets.
   3. dividends.
   4. liabilities.

3. Which of the following financial statements shows how net income (loss) and dividends impacted a stockholders' equity account?
   1. Statement of Retained Earnings
   2. Balance Sheet
   3. Statement of Cash Flows
   4. Income Statement

4. Golden Enterprises started the year with the following: Assets $50,000; Liabilities $15,000; Common Stock $30,000; Retained Earnings $5,000. During the year, the company earned revenue of $2,500, all of which was received in cash, and incurred expenses of $1,500, all of which were unpaid as of the end of the year. In addition, the company paid dividends of $500 to owners. Assume no other activities occurred during the year.

What was the amount of Golden's net income for the year?

1. $1,000
2. $500
3. $1,500
4. $2,500

Answer 1

1

Buying supplies would not represent a financing activity

Buying supplies is an operating activity

Option D is correct

2

The obligations and debts of a business are referred to as liabilities.

Option D is correct

3

Statement of Retained Earnings shows how net income (loss) and dividends impacted a stockholders' equity account.

Option A is correct

4

Net income for the year = Revenue-Expenses = 2500-1500 = $1,000

Option A is correct