The Costs of Bringing a Corporation into Existence, Including Legal

question 42

Multiple Choice

The costs of bringing a corporation into existence, including legal fees, promoters' fees, and amounts paid to the government are called:

• A) Minimum legal capital.
• B) Organization costs.
• C) Financial leverage.
• D) Prepaid expenses.
• E) Contributed capital.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Sales

The process where goods or services are traded for money, which constitutes the main revenue stream for the majority of companies.

Operating Cycle

The period it takes for a business to buy inventory, sell it to customers, and collect the cash from these sales.

Credit Sales

Revenues earned by selling goods or services that are paid for over time under agreed payment terms, rather than paid in full upfront.