The Nice Corporation Issues 10,000 Preference Shares with a $100

question 263

Multiple Choice

The Nice Corporation issues 10,000 preference shares with a $100 par value for cash at $110 per share. The entry to record the transaction will consist of a debit to Cash for $1,100,000 and a credit or credits to

• A) Share Capital-Preference for $1,100,000.
• B) Share Premium-Preference for $1,000,000.
• C) Share Capital-Preference for $1,000,000 and Retained Earnings for $100,000.
• D) Share Capital-Preference for $1,000,000 and Share Premium-Preference for $100,000.

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Total Costs

The complete sum of all expenses, both fixed and variable, incurred in the production of goods or services.

Break-even Quantity

The number of units that must be sold to cover all costs, after which profit begins to be generated.

Advertising Expenses

Costs incurred in promoting a product, service, or brand through various media, including print, online, television, and outdoor advertising.