Retained earnings are revenue of a corporation that is:
(A)Not paid out in dividends
(B)Paid to shareholders
(C)Considered gross profit
(D)Shown in a trial balance
(E)Issued in stock
Bart's Brewskies saw sales of $50,000 in December-primarily due to New Year's Eve celebrations. Bart determined that 30% of his sales are paid in cash, while the rest are billed for their brewskies. Of the money owed, 40% is paid December, while the remaining is paid the following month. What is the increase of Accounts Receivable on New Year's Eve?
(A)$21,000 (B)$14,000 (C)$15,000 (D)$35,000 (E)$50,000
Correct Answer: A
Jim's Jeans is being sued by a former employee for $100,000. The employee is claiming age discrimination. She is twenty-four and was terminated when Jim decided that he wanted all employees to be over the age of sixty-five. Jim's attorney has told him that the employee has a strong case and will probably win. How does this impact Jim's accounting records? Mark one answer:
(A)A note is made on the Balance Sheet regarding the lawsuit. (B)There is no impact on the financial statement unless the employee wins the suit. (C)A loss of $100,000 appears in the owner's equity section on the balance sheet. (D)An entry will appear on the statement of cash flows. (E)A contingent liability of $100,000 appears on the income statement as an expense.
Correct Answer: E
If a share of cumulative preferred stock has a call price of $95 and has had four years of dividends of $5 each, what is the book value of that share of stock? Mark one answer:
(A)$95 (B)$100 (C)$115 (D)$105 (E)$110
Correct Answer: C
More CPA Exam Questions
- 1The statement of cash flow reports are used for the following: (I)Investing activities(I) Financing activities(I)I Operating activities(I) Supplemental activities Mark one answer:
- 2If an exempt organization is a corporation, the tax on unrelated business taxable income is
- 3Jim's Jeans decided to shut down their Jimmy Jean Division. Where on the income statement would this closing be addressed? Mark one answer:
- 4If equipment is used by a corporation in its operations and is sold at a loss, under which section on the statement of cash flows is this reported? Mark one answer:
- 5In the current year, Fitz, a single taxpayer, sustained a $48,000 loss on Code Sec. 1244 stock in JJJ Corp., a qualifying small business corporation, and a $20,000 loss on Code Sec. 1244 stock in MMM Corp., another qualifying small business corporation. What is the maximum amount of loss that Fitz can deduct for the current year?