Which of the Following Journal Entries Is Correct When a Business

question 18

Multiple Choice

Which of the following journal entries is correct when a business entity issues stock to stockholders in exchange for cash?

• A) Cash
• \( \quad \) Retained Earnings
• B) Cash
• \( \quad \)Contributed Capital
• C) Cash
• \( \quad \)Accounts Payable
• D) Contributed Capital
• \( \quad \) \( \quad \)Cash

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Definitions:

Compounded Monthly

The process where interest is added to the principal sum of a deposit or loan each month, resulting in "interest on interest."

Compounded Annually

Interest calculation method where interest is added to the principal at the end of the year, affecting the total interest earned or paid.

RRSP

Registered Retirement Savings Plan, a Canadian account for holding savings and investment assets, with certain tax benefits.

Compounded Semi-annually

The technique of twice yearly adding interest to the initial sum of money and to the interest that has previously been compounded.