27) Which of the following accounts belongs in the equity section of a balance s

Question

27) Which of the following accounts belongs in the equity section of a balance
sheet?
a. Dividends
b. Retained earnings
c. Long-term debt
d. Cash



Table 3-1
Jones Company Financial Information
December 2007 December 2008
Net income $2,000 $5,000
Accounts receivable 750 750
Accumulated depreciation 1,000 1,500
Common stock 4,500 5,000
Paid-in capital 7,500 8,000
Retained earnings 1,500 2,500
Accounts payable 750 750
28) Based on the information in Table 3-1, calculate the after tax cash fl ow from
operations for 2008 (no assets were disposed of during the year, and there
was no change in interest payable or taxes payable).

a. $6,500
b. $3,375
c. $3,750
d. $5,500

30) Higher inventory turnover suggests that
a. the company’s inventory is more liquid.
b. the company’s inventory is somewhat obsolete.
c. the company has a higher inventory balance.
d. the company’s sales are higher.

33) Given an accounts receivable turnover of 20 and annual credit sales of
$400,000, the average collection period is:
a. 20 days
b. 45.625 days
c. 17.49 days
d. 18.25 days


40) It is your 5th birthday today. You have a trust fund with $50,000 that is earning
8% per year. You expect to withdraw $20,000 per year for 4 years start
ing on your 21st birthday for graduate school. How much money will be left
in the trust fund after your last withdrawal (rounded to the nearest $10)?
a. $135,780
b. $91,30
c. $125,660
d. You will not have enough money to pay for graduate school.

Explanation / Answer

27. b. Retained earnings 28. c. $3,750 30. b. the company’s inventory is somewhat obsolete. 33. d. 18.25 days 40. a. $135,780 please rate appreciated

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