16. The following table contains financial information for Vissla Inc. before cl

Question

16. The following table contains financial information for Vissla Inc. before closing entries Cash Supplies Prepaid rent Salary expense $12.000 4.500 2,000 4.500 65,000 30,000 20,000 3,000 5,000 68,000 8,000 Service revenue Miscellancous expenses Dividends paid Accounts payable Common stock Retained earnings What is Vissla Inc.'s net income? b. $2,500 c. $5,000 d. $5,500 17. Preferred stock is "preferred" by investors as compared to common stock because: a. It pays higher dividends than common. b. It has advantages of special rights to dividends and/or asset claims during liquidation. Preferred stock pays dividends and common stock pays interest. c. d. Dividends are expected to grow exponentially. 18. Which of the following transactions causes an increase in stockholders' equity? a. Pay dividends to stockholders. b. Obtain cash by borrowing from a bank. c. Purchase advertising on a local radio station. d. Provide services to customers on account.

Explanation / Answer

16. net income = Service revenue - Salary Expenses - Misc. Expenses

= $30,000 - $4,500 - $20,000

= $5,500

17. b It has advantages of special rights to dividends and /or assets claim during liquidation

18. provide services to customers on account.

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