Packard Company Engaged in the Following Transactions During Year 1

question 24

Multiple Choice

Packard Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)
1) Acquired $950 cash from the issue of common stock.
2) Borrowed $420 from a bank.
3) Earned $650 of revenues cash.
4) Paid expenses of $250.
"5) Paid a $50 dividend.
During Year 2, Packard engaged in the following transactions. (Assume all transactions are cash transactions.) "
1) Issued an additional $325 of common stock.
2) Repaid $220 of its debt to the bank.
3) Earned revenues of $750 cash.
4) Incurred expenses of $360.
"5) Paid dividends of $100.
Total assets on Packard's balance sheet at the end of Year 2 will equal:"

• A) $2,115.
• B) $440.
• C) $2,215.
• D) $395.

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Definitions:

Automatic Stabilizer

An Automatic Stabilizer is an economic policy or program designed to offset fluctuations in a nation's economic activity without intervention by the government or policymakers, such as progressive taxes and welfare.

Unemployment Compensation

Financial payments made by the government to unemployed individuals who are actively seeking work but have not found employment.

Social Security Taxes

Taxes collected by governments to fund social security programs, including retirement benefits, disability insurance, and survivor benefits.

Automatic Stabilizers

Economic policies and programs that automatically adjust to counteract economic fluctuations without additional government action.