Yowell Company Began Operations on January 1, Year 1

question 41

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 $40,000 2) borrowed $25,000 from its bank
3) provided consulting services for $39,000 cash
4) paid back $15,000 of the bank loan
5) paid rent expense for $9,000
6) purchased equipment for $12,000 cash
7) paid $3,000 dividends to stockholders
8) paid employees' salaries of $21,000
What is Yowell's net income for Year 1?

• A) $9,000
• B) $30,000
• C) $18,000
• D) $6,000

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Definitions:

Insuring Bank Deposits

A government or independent institution's act of providing a guarantee to bank depositors that their deposits will be protected up to a certain limit in the event of a bank failure.

Time Deposits

Time Deposits are savings accounts or certificates of deposit (CDs) that lock the depositor's funds for a certain period of time, during which early withdrawal incurs penalties.

Reserve Requirements

The portion of depositors' balances that banks must have on hand as cash, mandated by central banking authorities.

Treasury Bills

Short-term government securities issued with a promise to be paid back at a specified future date with a fixed interest rate.