Mofro's Computer Repair Shop Started the Year with Total Assets

question 89

Multiple Choice

Mofro's Computer Repair Shop started the year with total assets of $300,000 and total liabilities of $200,000. During the year, the business recorded $500,000 in computer repair revenues, $300,000 in expenses, and Mofro paid dividends of $50,000. The net income reported by Mofro's Computer Repair Shop for the year was

• A) $100,000.
• B) $150,000.
• C) $200,000.
• D) $250,000.

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Definitions:

Historical Cost Principle

An accounting principle that states assets should be recorded and reported at their original purchase cost.

Brokerage Fees

Charges levied by brokers for facilitating transactions between buyers and sellers in the financial markets.

Investment

The allocation of resources, typically money, into assets or projects with the expectation of generating income or profit.

Investment Income

Earnings from assets acquired, such as dividends on shares or interest on bonds.