Mega Computer Issued Stock with a Face Value of One

question 158

Multiple Choice

Mega Computer issued stock with a face value of one cent and then sold the shares to the public for $20.00 each. Ted bought 10 shares at that price. Today, Ted sold his shares to David for $25.00 each. What is the par value of the stock?

• A) $20.00
• B) $25.00
• C) $5.00
• D) $19.99
• E) $0.01

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Definitions:

Bank Errors

Mistakes made by a bank in the recording of transactions, which can include discrepancies in account balances and unauthorized transactions.

Cash Account

A cash account refers to a brokerage account where the investor must pay the full amount for securities purchased, as opposed to buying on margin.

Unrecorded Charges

Expenses or financial obligations that have not been documented in the accounting records, potentially leading to discrepancies.

Bank Reconciliation

The process of matching up the balances in a company's accounting records for a cash account to the corresponding information on a bank statement.