Use the Partial Income Statement Below to Answer the Following

question 9

Multiple Choice

Use the partial income statement below to answer the following group of questions
$$\begin{array} { l r r r } & \text { Actual } & \text { Budget } & \text { Difference } \\\text { Revenue from Sales } & \$ 65000 & \$ 55000 & 18 \% \\\text { Sales Discounts } & - 5000 & - 2000 & 150 \% \\\text { Net Sales } & 60000 & 53000 & 13 \% \\\text { Advertising } & 4000 & 1000 & 300 \% \\\text { Cost of Goods Sold } & 25000 & 28000 & - 11 \% \\& & & \\\text { Sales Commissions } & 6000 & 3000 & 100 \% \\\text { Other Expenses } & 4000 & 4000 & 0 \% \\\text { Total Expenses } & 39000 & 36000 & 8 \% \\& & & \\\text { Net Income } & \mathbf { 2 1 0 0 0 } & \underline { \mathbf { 1 7 0 0 0 } } & \mathbf { 2 4 }\end{array}$$
-From these results, you might conclude -

• A) increased advertising expenditures contributed to better performance
• B) sales commissions were a successful incentive to improve sales results
• C) discount sales terms encouraged more customers to buy
• D) all of the above conclusions are consistent with the results

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Definitions:

Preemptive Rights

Rights that allow existing shareholders to purchase additional shares before new shares are offered to the public, to maintain their proportionate ownership in the company.

Rights Offering

A corporate event in which a company offers existing shareholders the opportunity to buy additional shares directly from the company at a discounted price, typically to raise capital.

Subscription Agreement

A contract between a company and investors for the purchase of shares in a private placement.

Dilution

The reduction in existing shareholders' ownership percentage of a company due to the issue of new shares.