The Balance of Retained Earnings at the Beginning of the Year

question 41

Multiple Choice

The balance of retained earnings at the beginning of the year was $475,000, and the balance at the end of the year was $550,000. Cash dividends declared during the year were $35,000. The amount of net income for the year was

• A) $75,000.
• B) $515,000.
• C) $110,000.
• D) $80,000.

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Definitions:

Perpetual Inventory System

An inventory system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Inventory System

A method of tracking the quantity, type, and value of products or materials a company has in stock.

Single-step Income Statement

A simplified income statement format that calculates net income by subtracting total expenses from total revenues in a single step.

Periodic Inventory System

A method of inventory valuation for financial accounting purposes where a physical count is performed at specific intervals to determine the ending inventory balance and the cost of goods sold.