The Following Totals for the Month of June Were Taken

question 75

Multiple Choice

The following totals for the month of June were taken from the payroll register of Arcon Company:? $$\begin{array} { l r } \text { Sal aries expense } & \$ 14,000 \\\text { Social security and Medicare taxes withheld } & 1,050 \\\text { Income taxes withheld } & 2,600 \\\text { Retirement savings } & 1,000\end{array}$$ The entry to record the payment of net pay would include a

• A) debit to Salaries Payable for $14,000
• B) debit to Salaries Payable for $9,350
• C) credit to Salaries Expense for $9,350
• D) credit to Salaries Payable for $9,350

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Definitions:

Intrinsic Value

The actual, inherent value of a financial asset, determined through fundamental analysis without reference to its market value.

Strike Price

The pre-determined price at which the holder of an option can buy (call option) or sell (put option) the underlying asset.

Call Premium

The amount by which the call price of a bond or other security exceeds its face value, often applicable when the security is called before maturity.

Out-of-the-money

A term used in options trading referring to an option that has no intrinsic value. For a call option, it means the stock price is below the strike price; for a put option, it means the stock price is above the strike price.