A Company Started the Year with the Following: Assets $100,000;

question 80

Multiple Choice

A company started the year with the following: Assets $100,000; Liabilities $30,000; Common Stock $60,000; Retained Earnings $10,000.During the year, the company earned revenue of $5,000, all of which was received in cash, and incurred expenses of $3,000, all of which were unpaid as of the end of the year.In addition, the company paid dividends of $1,000 to owners.Assume no other activities occurred during the year.
-Use the information above to answer the following question.The amount of retained earnings at the end of the year is

• A) $15,000.
• B) $11,000.
• C) $12,000.
• D) $1,000.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as utility bills that increase with production volume.

Cash Break-Even

The sales level where operating cash flow is equal to zero.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, and loan payments.

Selling Price

The amount at which a product or service is offered to the market.