During 2019,Sensa Corporation Incurred Operating Expenses Amounting to $100,000,of Which

question 6

Multiple Choice

During 2019,Sensa Corporation incurred operating expenses amounting to $100,000,of which $75,000 was paid in cash;the balance will be paid during 2020.Which of the following is correct for the 2019 year-end balance sheet?

• A)Stockholders' equity decreases $75,000 and assets decrease $75,000.
• B)Assets decrease $100,000 and stockholders' equity decreases $100,000.
• C)Assets decrease $100,000,liabilities increase $25,000,and stockholders' equity decreases $100,000.
• D)Stockholders' equity decreases $100,000,assets decrease $75,000,and liabilities increase $25,000.

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Definitions:

Reacquired Shares

Shares that a company buys back from its shareholders, reducing the amount of outstanding stock on the market.

Par Common Stock

The nominal or face value assigned to common shares in the articles of incorporation, often having little relation to the market value.

Preferred Stock

represents a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with fixed dividends.

Earnings Per Share

A financial ratio that measures the amount of profit attributed to each outstanding share of common stock, indicating a company's profitability on a per-share basis.