At the Beginning of the Year,Ms

question 62

Multiple Choice

At the beginning of the year,Ms.Faro paid $15,000 for 750 shares of Gravois stock.She instructed her broker to reinvest any dividends in additional Gravois shares.Her Form 1099-DIV reported that she earned $820 dividend income which purchased 39 additional shares.Which of the following statements is true?

• A)Ms.Faro recognizes no dividend income and has a $15,000 basis in her 789 shares.
• B)Ms.Faro recognizes no dividend income and has a $15,820 basis in her 789 shares.
• C)Ms.Faro recognizes $820 dividend income and has a $15,820 basis in her 789 shares.
• D)None of the above statements is true.

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Definitions:

Revenue Account

An account that tracks the income generated from normal business operations, such as sales of goods or services.

Credited

A bookkeeping record that augments liabilities or equity, or diminishes an asset or expense.

Assets

Assets are resources owned by a business or individual that have economic value and can be converted into cash or provide future benefits.