In Its First Year of Business,Wok 'N' Roll,Inc

question 24

Multiple Choice

In its first year of business,Wok 'n' Roll,Inc.earned $100,000 of revenues of which $80,000 was collected.It also incurred $90,000 in expenses for which $80,000 was paid.Which of the following statements are correct?

• A) Wok 'n' Roll should use cash basis accounting for external reporting purposes as required under GAAP and IFRS.
• B) Wok 'n' Roll should report net income of $10,000 for external reporting purposes.
• C) Wok 'n' Roll should report $0 net income for external reporting purposes.
• D) Wok 'n' Roll should report net income of $20,000 for external reporting purposes.

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Definitions:

Synaptic Vesicle

Secretory vesicle in the presynaptic terminal containing neurotransmitter substances.

Chemical Synapse

A specialized junction at which a neuron communicates with a target cell across a synaptic cleft using chemical messengers.

Presynaptic Terminal

The end of a nerve fiber where the release of chemicals (neurotransmitters) occurs, enabling the transfer of the signal to another neuron's receptor site.

Postsynaptic Membrane

Refers to the membrane on the neuron receiving end of a synapse, where neurotransmitters are received.