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Financial Forensics · Retained earnings & equity

7 questions · 7 marks · 1 paper

Answer key

Indian Institute of Technology Madras

BS Degree Programme · Examination & Study Paper

Financial Forensics

Retained earnings & equity

Official Paper

Examination Instructions & Guidelines

Solve on notebook/paper first before checking solutions.
MCQ: Exactly 1 option is correct. Negative marking applies.
Scientific calculator allowed for all calculations.
Official answer key is sealed at the end of this sheet.

Q1MCQ1 Mark·Choose one option
Key ↓
1. ARetained earnings are $302,000 and expenses incurred totaled $894,000.
2. BRetained earnings are $302,000 and expenses incurred totaled $962,000.
3. CRetained earnings are $618,000 and expenses incurred totaled $646,000
4. DRetained earnings are $618,000 and expenses incurred totaled $934,000.
Q2MCQ1 Mark·Choose one option
Key ↓
Duck Corporation's retained earnings increased $41,200 during the current year. What was Duck's current year net income or loss given that Duck declared $51,200 of dividends during this year?
1. ANet income was $10,000.
2. BNet income was $92,400.
3. CNet loss was $92,400.
4. DNet loss was $10,000.
Q3MCQ1 Mark·Choose one option
Key ↓
Kelly Tiles Incorporated has provided the following data for its 2024 operations (ignore income taxes): 2024 revenues were $149,000. 2024 expenses were $72,700. Dividends declared and paid during 2024 totaled $14,500. Total assets at December 31, 2024 were $305,000. Total liabilities at December 31, 2024 were $150,000. Common stock at December 31, 2024 was $35,000. Which of the following is correct?
1. A2024 net income was $61,800.
2. BTotal stockholders' equity at December 31, 2024 was $318,000.
3. CRetained earnings at December 31, 2024 were $120,000.
4. DRetained earnings at December 31, 2024 were $61,800.
Q4MCQ1 Mark·Choose one option
Key ↓
Total assets are $37,500, total liabilities are $20,000 and common stock is $10,000; therefore, retained earnings are $7,500.
1. ATrue
2. BFalse
Q5MCQ1 Mark·Choose one option
Key ↓
For the current year, net income of Carol Company is $20,000 and dividends declared are $6,000; therefore, retained earnings have increased $26,000 during the year.
1. ATrue
2. BFalse
Q6MCQ1 Mark·Choose one option
Key ↓
Which of the following would immediately cause a change in a corporation's retained earnings?
1. ANet income or net loss and declaration of dividends.
2. BDeclaration of dividends and issuance of common stock to new stockholders.
3. CNet income and issuance of stock to new stockholders.
4. DDeclaration of dividends and purchase of new machinery.
Q7MCQ1 Mark·Choose one option
Key ↓
Which of the following would most likely increase retained earnings?
1. AAn increase in expenses.
2. BAn increase in revenues.
3. CDeclaring a cash dividend.
4. DIssuing additional common stock.

Official Key

Master Answer Key & Explanations

Official answer keys from IIT Madras BS past papers. Click any question to review.

Reveal Key

Q1A

Q2B

Q3C

Q4A

Q5B

Q6A

Q7B

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