At the End of Its First Month of Operations,JMP Consulting

question 39

Multiple Choice

At the end of its first month of operations,JMP Consulting reported net income of $25,000.They also had account balances of: Cash,$18,000; Office Supplies,$2,000; and Accounts Receivable,$10,000.Stockholders' total investments for this first month was $5,000.There were no dividends in the first month. Calculate the amount of total stockholders' equity reported on the balance sheet at month-end.

• A)$30,000
• B)$25,000
• C)$20,000
• D)$5,000
• E)$7,000

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Definitions:

Depreciation Expense

The allocation of the cost of a tangible asset over its expected useful life to account for its decline in value.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing on cash flow rather than profitability.

Time Value

The idea that having money now is more valuable than having the same amount later because of the possible income it can generate.

Obsolescence

The process of an asset becoming outdated or no longer used, often due to technological advancements.