Its 2010 Balance Sheet, Barngrover Books Showed $510 Million of Retained

question 20

Multiple Choice

its 2010 balance sheet, Barngrover Books showed $510 million of retained earnings, and exactly that same amount was shown the following year.Assuming that no earnings restatements were issued, which of the following statements is CORRECT?

• A)If the company lost money in 2010, they must have paid dividends.
• B)The company must have had zero net income in 2010.
• C)The company must have paid out half of its earnings as dividends.
• D)The company must have paid no dividends in 2010.
• E)Dividends could have been paid in 2010, but they would have had to equal the earnings for the year.

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Definitions:

Unfavorable Effect

Occurs when actual costs exceed budgeted costs, or actual revenues are less than expected, negatively impacting financial performance.

Trained Workers

Personnel who have received specific training to perform their job duties effectively and efficiently.

Variances

Differences between planned or standard costs and actual costs, analyzed to understand and manage costs within financial planning.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (or standard) cost of those materials.