The Opening Balances of Capital Stock and Retained Earnings for a Company

question 55

Multiple Choice

The opening balances of capital stock and retained earnings for a company were $2,200,000 and $1,325,000, respectively.During the year, they earned net income of $425,000, the shareholders invested an additional $500,000 for shares and the company paid dividends of $42,000.What was the closing amount of shareholders' equity?

• A)$1,708,000
• B)$2,208,000
• C)$3,908,000
• D)$4,408,000

Understand the role of safety margin in financial planning.

Recognize the limitations and criticisms of CVP analysis.

Differentiate between fixed, variable, and total costs in the context of CVP analysis.

Explain the concept of operating leverage and its impact on profitability.

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Definitions:

Form Factor

A specification that defines the physical size, shape, and layout of a device or component, often referring to computers and mobile devices.

Convertible Tablet

A tablet device that includes a keyboard or other mechanism allowing it to be used as a laptop computer.

All-In-One

A single device that combines multiple functionalities, such as a computer that integrates the monitor, CPU, and other components.

Hard Drive

A digital information storage device that utilizes one or more swiftly rotating, rigid disks coated with a magnetic substance for data storage and retrieval.