The Following Account Balances Were Drawn from the Year 1

question 61

Multiple Choice

The following account balances were drawn from the Year 1 financial statements of Grayson Company: What is the balance of the Common Stock account?

• A)$11,450
• B)$8,700
• C)$950
• D)$11,400

Determine expected cash collections and disbursements within a given period.

Calculate differences between cash receipts and cash disbursements.

Understand the concept of budgeting raw material purchases based on production requirements.

Calculate net income and its components.

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Definitions:

Board of Directors

A group of individuals elected by shareholders to oversee the management and make major decisions for a corporation.

Legal Dividend

A dividend that a company is legally allowed to distribute as determined by its net income or retained earnings.

Noncumulative Preferred Stock

A type of preferred stock that does not accumulate unpaid dividends; if a dividend is skipped, it is not required to be paid later.

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders but reinvested in the business or kept as a reserve.