Yowell Company Began Operations on January 1, Year 1

question 82

Multiple Choice

Yowell Company began operations on January 1, Year 1. During Year 1, the company engaged in the following cash transactions:
1) issued stock for $76,0002) borrowed $43,000 from its bank3) provided consulting services for $75,000 cash4) paid back $33,000 of the bank loan5) paid rent expense for $18,0006) purchased equipment for $30,000 cash7) paid $4,800 dividends to stockholders8) paid employees' salaries of $39,000
What is Yowell's net income for Year 1?

• A) $57,000
• B) $18,000
• C) $13,200
• D) $34,200

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Definitions:

Diminishing Returns

A principle stating that as investment in a single area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Marginal Product

The additional output generated by employing one more unit of a particular input, holding all other inputs constant.

Hiring Labor

The process of engaging individuals to perform services or work for compensation.

Stock Prices

The current market price of a share of a company's stock, reflecting investor perceptions of the company's future financial prospects.