Question

During 2016, Banigo Corporation experienced an increase in total assets of $72,600 and an increase in total liabilities of $40,900. Assuming that capital stock increased by $5,000 and no dividends were paid, calculate Banigo's net income or net loss for 2016.

a. Net loss of $45,900

b. Net income of $26,700

c. Net income of $67,600

d. Net loss of $31,700

2.

Which of the following statements is FALSE?

Select one:

a. The statement of cash flows shows the cash inflows and outflows over a period of time.

b. The statement of retained earnings shows the change in retained earnings between the beginning and end of a period.

c. The income statement reflects a company's profitability during a period of time.

d. The balance sheet reflects a company's profitability from operations.

e. The balance sheet represents a “snapshot” of the company's solvency and financial position.

3.

corporation is:

Select one:

a. An unincorporated business owned by two or more persons.

b. A business chartered directly by Congress.

c. A business incorporated under the laws of a state and owned by a single proprietor.

d. A business incorporated under the laws of a state and owned by stockholders.

e. Only incorporated by the IRS.

f. A government agency.

Answer 1

1. b. Net income of $26,700

Net Income/Loss = Increase in Assets - Increase in Liabilities - Common stock issued + Dividend

= $72,600 - $40,900 - $5,000 + $0

= $26,700

2. d. The balance sheet reflects a company's profitability from operations.

A balance sheet reports a company's assets, liabilities and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure. It is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders.

3. d. A business incorporated under the laws of a state and owned by stockholders.

A corporation is an organization or a company, authorized to act as a legal entity and recognized as such in law.