Jelly Bean Company Uses the Indirect Method to Prepare Its $\quad$

question 20

Multiple Choice

Jelly Bean Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Jelly Bean Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2014 and 2013
$\begin{array}{lrrc}\hline&2014&2013& \text { Increase/decrease } \\ \text { Common Stock } & \$ 30,000 & \$ 2,000 & \$ 28,000 \\\text { Retained Earnings} & 120,000 & 75,000 & 45,000 \\\text { Treasury Stock} & (12,000) & (8,000) & (4,000) \\\text {Total equity} & \$138,000& \$69,000 & \$69,000 \\\hline\end{array}$
Note:
1) There were no stock retirements during the year.
2) There were no sales of treasury stock during the year.
Which of the following statements would be true?"

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Definitions:

Legal Requirements

Regulations and laws that an entity must follow in its operations, often varying by industry, region, and other factors.

Large Businesses

Companies that typically operate on a large scale with significant asset values, large number of employees, and high volume of sales and production.

Corporations

Legal entities that are separate and distinct from their owners, with the ability to own assets, incur liabilities, and engage in business activities.

Partnership

A legal form of business operation between two or more individuals who share management and profits.