Mega Corporation Has Been Operating Successfully for a Number of Years

question 55

True/False

Mega Corporation has been operating successfully for a number of years and needs additional capital to meets its expansion strategy.Warren Tuffett, a wealthy businessman, contributes $100 million of cash in exchange for shares in Mega.Mega recognizes gross income for the contribution.

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Definitions:

Deposits in Transit

Deposits in Transit are amounts that have been received and recorded by a business but not yet reflected in its bank statement.

Bank Statement

A summary of financial transactions that have occurred over a period of time in an account held by a person or business with a financial institution.

Cash Account

A financial account that tracks the flow of cash transactions, including receipts and payments, within a company.

Sales Discounts

Reductions in the sale price offered by a seller as an incentive for prompt payment by the buyer.