Elston Company Compiled the Following Financial Information as of December

question 198

Multiple Choice

Elston Company compiled the following financial information as of December 31, 2014: $$\begin{array} { l r } \text { Service revenue } & \$ 700,000 \\\text { Common stock } & 150,000 \\\text { Equipment } & 200,000 \\\text { Operating expenses } & 625,000 \\\text { Cash } & 175,000 \\\text { Dividends } & 50,000 \\\text { Supplies } & 25,000 \\\text { Accounts payable } & 100,000 \\\text { Accounts receivable } & 75,000 \\\text { Retained earnings, } 1 / 1 / 14375,000\end{array}$$ Elston's stockholders' equity on December 31, 2014 is

• A) $525,000.
• B) $550,000.
• C) $400,000.
• D) $600,000.

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Definitions:

Payment of Account

The process of settling a liability or an amount owed to a creditor, vendor, or supplier by making a cash or electronic payment.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its credit sales, calculated as sales divided by average accounts receivable.

Days' Sales in Receivables

A financial metric that estimates the average number of days it takes a company to collect payments after a sale has been made.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically comprising the balance sheet, income statement, and cash flow statement.