Part I: Multiple Choice (40 Points)
The primary purpose of the balance sheet is to
A) measure the net income of a business up to a particular point in time.
B) report the difference between cash inflows and cash outflows for the period.
C) report the financial position of the reporting entity at a particular point in time.
D) None of the above is correct.
On January 1, 20A, two individuals invested $200,000 each to form Reiner Corporation.
total revenues of $20,000 during 20A and $50,000 during 20B.
Total expenses for the same periods
were $12,000 and $36,000 respectively.
Cash dividends paid out to stockholders totaled $6,000 in 20A
and $10,000 in 20B.
What was Reiner's total stockholders' equity at the end of 20A and 20B?
A) $402,000 and $406,000 respectively.
B) $8,000 and $14,000 respectively.
C) $8,000 and $22,000 respectively.
D) $402,000 and $404,000 respectively.
Abrahams Corporation reported the following amounts at the end of the first year of operations,
December 31, 20A: contributed capital $50,000; sales revenue $200,000; total assets $150,000; $10,000
dividends; and total liabilities $80,000.
Retained earnings and total expenses would be
A) retained earnings $20,000 and expenses $170,000
B) retained earnings $30,000 and expenses $160,000.
C) retained earnings $70,000 and expenses $120,000.
D) retained earnings $80,000 and expenses $110,000
E) None of the above.