Exhibit 2-1 Total Assets Total Liabilities

question 27

Multiple Choice

Exhibit 2-1
Total Assets Total Liabilities
Beginning of the year $300,000 $130,000
End of the year $800,000 $550,000
-Refer to Exhibit 2-1.Determine the net income (or loss) ,assuming $50,000 of stock was issued and $40,000 of dividends were paid?

• A)$70,000
• B)$210,000
• C)$260,000
• D)$10,000

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Definitions:

Perpetuity

A financial instrument or investment that pays a fixed amount of money indefinitely without a maturity date.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with fixed dividends.

Annual Dividend

The total dividend payment a company makes to its shareholders in a year.

Compounded Monthly

A method of calculating interest in which the interest accrued in each month adds to the principal for the calculation of subsequent interest.