The Following Question(s) Refer to the Year-End Account Balances for UBUS

question 65

Multiple Choice

The following question(s) refer to the year-end account balances for UBUS, Inc. The accounts are listed in alphabetical order, NOT in the order they appear on the financial statements. The applicable tax rate is 40%.
$\begin{array}{l}\text { UBUS Income Statement }\\\begin{array}{ll}\text { Cost of Goods Sold } & 330 \\\text { Depreciation Expense } & 35 \\\text { Interest Expense } & 20 \\\text { Operating Expense (excluding depreciation) } & 115 \\\text { Sales } & 600 \\\text { Tax } & ? ? ?\end{array}\end{array}$
$\begin{array}{l}\text { UBUS Balance Sheet }\\\begin{array}{ll}\text { Accounts Payable } & 35 \\\text { Accounts Receivable } & 65 \\\text { Accruals } & 30 \\\text { Accumulated Depreciation } & (175) \\\text { Cash } & 35 \\\text { Common Stock } & 120 \\\text { Fixed Assets (gross) } & 390 \\\text { Inventory } & 135 \\\text { Long Term Debt } & 200 \\\text { Retained Earnings } & 65\end{array}\end{array}$
-What was UBUS Inc.'s Net Income?

• A)$72
• B)$45
• C)$60
• D)$20
• E)$100

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Definitions:

Debit Balances

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Credit Balances

The total amount of money in accounts that represent a liability or income to a company, opposite of debit balances.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment activities, and financing activities.

Operating Activities

Activities that are directly related to the primary business operations, such as selling goods and services.