Santa Fe Company Was Started on January 1, Year 1

question 113

Multiple Choice

Santa Fe Company was started on January 1, Year 1, when it acquired $9,400 cash by issuing common stock. During Year 1, the company earned cash revenues of $5,600, paid cash expenses of $3,450, and paid a cash dividend of $1,000. Which of the following is true based on this information?

• A)The Year 1 statement of cash flows would show net cash inflow from operating activities of $5,600.
• B)The December 31, Year 1 balance sheet would show total equity of $8,400.
• C)The Year 1 income statement would show net income of $1,150.
• D)The Year 1 statement of cash flows would show a net cash inflow from financing activities of $8,400.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing predictability to a business's expenses.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, valued at the standard labour rate.

Credit Balance

An account balance that shows money owed to the account holder, often indicating a creditor position in financial records.

Materials Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost multiplied by the actual quantity purchased or used.