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Arch Associates Reports the Following Comparative Balance Sheets and Income

question 14

Multiple Choice

Arch Associates reports the following comparative balance sheets and income statement information.
$\begin{array}{l}\hline \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Arch Associates } \\\hline\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text { Comparative Balance Sheets } \\\begin{array}{|l}\hline \\\hline \text { Cash}\\\hline \text { Accounts receivable}\\\hline \text { Prepaid insurance}\\ \hline \text { Inventory }\\\hline \text { Property, plant and equipment}\\\hline \text { Total assets}\\\hline \\\hline \text { Accounts payable}\\\hline \text { Salaries payable}\\\hline \text { Long term notes payable}\\\hline \text { Stockholders' equity}\\\hline \text { Total liabilities and equity}\\\hline \end{array}\begin{array}{|c|}\hline 12 / 31 / 2013\\\hline \$ 12,000 \\\hline 4,000 \\\hline 10,000 \\\hline 6,000 \\\hline 12,000 \\\hline \$ 44,000 \\\hline & & \\\hline \$ 8,000 \\\hline 10,000 \\\hline 8,000 \\\hline 18,000 \\\hline 44,000 \\\hline \end{array}\begin{array}{c|}\hline 12 / 31 / 2014 \\\hline 22,000 \\\hline 8,000 \\\hline 8,000 \\\hline 2,000 \\\hline 10,000 \\\hline 50,000 \\ \hline \\\hline 12,000 \\\hline 4,000 \\\hline 6,000 \\\hline 28,000 \\ \hline 50,000 \\\hline \end{array}\end{array}$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Income Statement }$
$\quad$ $\quad$ $\quad$ $\text { Year Ended 12/31/14 }$
$\begin{array}{|l|ll|}\hline\text {Revenue} &\$ & 70,000 \\\hline \text {Cost of goods sold} && 40,000 \\\hline \text {Gross margin} && 30,000 \\\hline \text {Operating expense} && \underline { 20,000} \\\hline \text {Net income} &\$ & \underline { 10,000}\\\hline\end{array}$ The amount of cash revenue collected received from customers during 2014 Year 2 was:

Definitions:

Open Market

A system where the trading of goods or securities is conducted freely with minimal or no barriers to entry or regulations.

Fair Market Value

The price that an asset would sell for in the marketplace, determined by the normal interaction between buyers and sellers, free from external pressures.

Fair Market Value

The price at which property would sell on the open market between a willing buyer and a willing seller, both having reasonable knowledge of the relevant facts.

Capital Loss

A financial loss that occurs when the selling price of an investment is less than its purchase price.