Question

Which of the following best describes the relationship between revenue and retained earnings?
Multiple Choice
A. Revenue represents a cash receipt; retained earnings is an element of stockholders' equity.
B. Retained earnings is equal to assets minus expenses.
C. Revenue represents the price of goods sold or services rendered; retained earnings represents cash available for paying dividends.
D. Revenue increases net income, which in turn increases retained earnings.

Which of the following is not a right of stockholders?
Multiple Choice
A. To share in the distribution of assets if the corporation is liquidated.
B.To vote for directors and on key issues.
C. To participate in dividends declared.
D. To select the Chief Executive Officer.

The directors of a corporation:
Multiple Choice
A. Are responsible for formulating corporate policy and for hiring corporate officers.
B.Are elected by the shareholders to run day-to-day operations.
C.May not own stock in the same corporation or be officers of the same corporation.
D.Are hired by the officers to run the business on a day-to-day basis.

Which of the following best describes retained earnings?
Multiple Choice
A.Cash available for expansion and growth.
B.Income that has been reinvested in the business rather than distributed as dividends to stockholders.
C.The amount initially invested in the business by stockholders.
D. Cash available for dividends.

Answer 1

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1. Which of the following best describes the relationship between revenue and retained earnings?
   Multiple Choice

Correct answer is option D. Revenue increases net income, which in turn increases retained earnings.

2. Which of the following is not a right of stockholders – Correct answer is option D. to select the Chief Executive Officer
3. The directors of a corporation Correct answer is option B. - Are elected by the shareholders to run day-to-day operations
4. Which of the following best describes retained earnings? – Correct answer is option B.- Income that has been reinvested in the business rather than distributed as dividends to stockholders.