Retained earnings can only increase

I must answer to questions of Financial Accounting Management. I have 40 questions to answer and some documents to read from a book

RUNNING HEAD: ACCOUNTING
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Accounting

Accounting
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1. True
2. False
3. False (Retained earnings = Net income – Dividends, Hence, retained earnings can only
increase by 14,000 not 26,000)
4. True
5. True
6. False
7. False
8. True
9. (A) an income statement covers a period of time
10. $120,000
Revenues= 400,000 Expenses = 250,000 Tax rate = 20%
Net Income = Revenues- Expenses-Income Tax
= 400,000-250,000-30,000
=120,000
11. Retained earnings $80,000 and Expenses $680,000
Capital= 200,000 Revenue= 800,000 Total Assets= 600,000 Dividend Declared= 40,000
Total Liabilities= 320,000
Equity= Total assets-total liabilities
600,000-320,000 =>280,000
Stockholder equity= Capital + retained earnings
280,000= 200,000 + retained earnings
Hence, Retained earnings = 80,000
Net income= Retained earnings+ Dividend
=80,000+ 40,000
Net Income= 120,000
Net Income= Revenue- Expenses
120,000= 800,000- Expenses, Hence Expenses= 680,000

Accounting
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12. (D) a corporation’s net income does not necessarily equal its net cash flow from
operations
13. (A) Cost flow from manufacturing activities
14. (A) a net cash flow of $42,900
Increase in Cash balance from $79,000 to $91,000,
Cash Flow from operating activities= 37,000
Cash Flow from financing activities= 11,100
Cash Flow from investing activities = 42,900
Cash Balance = 91,000
15. (A). Implementing a system of controls over the company’s records and assets
16.
Income statement for the month of January
Items Amount ($)
Revenues 90,000
Cost of Sale (45,000)
Gross Profits 45,000
Expenses
Salaries 5,000
Telephone 250
Office supplies 150
Electricity 300
Rent 1,000
Total Expenses 6.700
Net Income 38,300
Cash Flow From Operating Activities Amount
($)
Cash Sales 75,000
Purchases (45,000)
Salaries (5,000)
Telephone (250)
Office Supplies (150)
Electricity (300)
Net cash inflow from operating activities 24,300

Accounting
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17. (A) $98,700
Increase in Assets = $95,500
Liabilities Decreased = $17,300
Stockholder Equity at the end = $211,500
Stockholder Equity at the beginning= [211,500 – (95,500+17,300)] = $98,700
18. (A) 2019 expenses were $37,500
Stockholder Equity = Total assets- Total liabilities
123,000= 217,000-TL
Total Liabilities= $94,000
Net Income= Revenues- Expenses- Dividend Paid
33,900= 77,500-Expenses- 5,700
Expenses= 37,900
19. (D) $61,900
Items Amount ($)
Cash Borrowed 31,700
Cash Received from selling stocks 41,000
Loan repay (7,500)
Dividend Paid (3,300)
Cash Flow from financing activities 61,900
20. (B) the income statement affects the results of the statement of stockholders equity
Chapter 2
21. True
22. True
23. True
24. False
25. True
26. True
27. (A) an increase in a liability and a decrease in an asset

Accounting
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28. ( C ) $80,000
Total assets = $120,000 Total Liabilities = $40,000
Stock= TA-TL
80000= 120000-40000
29. (D) assets remain the same
30. (C ) Land used in daily operations
31. (D) Stockholder equity and assets each increased by $200,000
32. (B) selling shares of stock to stockholders in exchange for cash
In this case, cash increases that mean current assets increases and liabilities remain the
same this resultant in increase in current ratio.
33. Total assets= 150,000-10,000-5000+25,000-5,000=> 155,000
Total Liabilities= 60,000-10,000-5000+20,000=> 65,000
Stockholder Equity= 90,000
34. ( C ) 248,000
Stakeholder equity at beginning – loss+ stock issued- dividend paid
= 200,000-30,000+80,000-2,000
= 248,000
35. $32,000
Stockholder equity = Total assets – Total liabilities
= 80,000-36,000=> 44,000
Contributed Capital Account = Equity – Retained Earnings
= 44,000- 12,000
= 32,000
36. (A) signing a contract to have an outside cleaning service clean office nightly
37. (B) Paying a supplier for inventory previously purchased
This will decrease cash from assets and account payable from liabilities
38. (D) Total assets increased $100,000

Accounting
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Asset increase (150,000- cash 50,000) Total increase in assets = 100,000
Increase in liabilities 100,000
39. (B) Liability accounts are decreased by credits
40. $96,800
Current Assets= Cash + Short term investments+ account receivables+ Inventories
= 38,800+4,000+6,000+48,000
= 96,800