Marcos Company Reported the Following Items on Its Financial Statements

question 116

Multiple Choice

Marcos Company reported the following items on its financial statements for the year ending December 31, 2016: ? $$\begin{array} { l r l r } \text { Sales } & \$ 560,000 & \text { Cost of goods sold } & \$ 400,000 \\\text { Salary expense } & 40,000 & \text { Interest expense } & 30,000 \\\text { Dividends } & 20,000 & \text { Income tax expense } & 25,000\end{array}$$ ?
How much will be reported as retained earnings on Marcos' balance sheet at December 31, 2016, if this is the first year of operations?

• A) $ 45,000
• B) $ 65,000
• C) $ 85,000
• D) Not enough information is provided.

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Definitions:

Opportunity Cost

Giving up potential improvements from various alternatives by choosing one option.

Scarcity

Scarcity refers to the fundamental economic problem of having seemingly unlimited human wants in a world of limited resources, leading to the necessity of allocation decisions.

Production

The process of combining various inputs to make goods or services for consumption.

Comparative Advantage

The capacity of an individual or country to manufacture a given good or service more efficiently, incurring lower opportunity costs than their counterparts.