The First Year of Operations for a Company Was Year

question 159

Multiple Choice

The first year of operations for a company was Year 1.The net income for the year Year 1 was $20,000 and dividends of $12,000 were paid.In Year 2, the company reported net income of $34,000 and paid dividends of $5,000.At the end of Year 1, the company had total assets of $150,000.At the end of Year 2, the company had total assets of $240,000.
-Use the information above to answer the following question.What is the amount of retained earnings at the end of Year 2?

• A) $37,000.
• B) $240,000.
• C) $29,000.
• D) $269,000.

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Definitions:

Price of Labor

The wage rate or the amount of compensation workers receive in exchange for their labor.

Price of Capital

The cost of obtaining funds or resources to invest in projects, typically considered in terms of interest rates or returns required by investors.

Short-Run Costs

Costs incurred by a firm that vary with the level of output produced, typically including both fixed and variable costs within a specific time frame.

Output Level

The quantity of goods or services produced by a firm or an economy within a given period.