During February 2015 Its First Month of Operations, the Stockholders

question 95

Multiple Choice

During February 2015 its first month of operations, the stockholders of Ariel Pink Enterprises invested cash of $50,000. Ariel had cash revenues of $10,000 and paid expenses of $14,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

• A)$4,000 credit
• B)$4,000 debit
• C)$46,000 debit
• D)$54,000 debit

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Definitions:

Sweetener

A feature that makes a security more attractive to some investors, thereby inducing them to accept a lower current yield. Convertible features and warrants are examples of sweeteners.

Bankers' Acceptance

A short-term debt instrument issued by a company that is guaranteed by a commercial bank, commonly used in international trade.

Securitization

The process whereby financial instruments that were previously thinly traded are converted to a form that creates greater liquidity. Securitization also applies to the situation where specific assets are pledged as collateral for securities, and hence asset-backed securities are created. One example of the former is junk bonds; an example of the latter is mortgage-backed securities.

Warrants

Financial instruments that give the holder the right, but not the obligation, to buy shares of a stock at a specified price before the warrant expires.