Given the Data Below for a Firm in Its First

question 203

Multiple Choice

Given the data below for a firm in its first year of operation, determine net income under the cash basis of accounting.

• A)$9,500
• B)$14,000
• C)$7,700
• D)$9,950

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Definitions:

Par-value

The nominal or face value assigned to a share of stock by the company's charter, not necessarily reflecting its market value.

Actual Value

The true or fair market value of an asset or property, as opposed to its estimated or perceived value.

Indebtedness

A financial condition in which an individual or organization owes money to another party.

Debenture

A type of long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.