When Patricia Sells Her General Motors Common Stock at the Same

question 19

Multiple Choice

When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of GM stock,GM receives:

• A) the dollar value of the transaction.
• B) the dollar amount of the transaction, less brokerage fees.
• C) only the par value of the common stock.
• D) nothing.

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid out, not when they are earned or incurred.

Time Basis

A method of compensation or work arrangement based on the amount of time spent on a job rather than the task's outcome.

Expenses Recorded

The process of documenting all costs incurred during a specific period in the financial records, which are used to assess the company's profitability.

Current Ratio

A financial ratio that measures the number of times the firm can cover its current liabilities with its current assets.