Cambridge Cleaners Started Business on January 1, 2013, and Immediately

question 108

Multiple Choice

Cambridge Cleaners started business on January 1, 2013, and immediately purchased $5,000 of supplies to use in the business. At the end of the month, 30 percent of the supplies remains unpaid and 20% are still on hand. What amounts should appear as an expense on the financial statements for January, 2013? Income Statement Statement of Cash Flows

• A)$5,000 $5,000
• B)$5,000 $3,500
• C)$4,000 $1,500
• D)$4,000 $3,500

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Definitions:

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, which may differ from its market value.

Entity

An organization or being with a distinct and independent existence, usually referred to in legal, financial, or tax contexts.

No-Par Value Stock

Capital stock that has not been assigned a value in the corporate charter.

Legal Capital

The minimum amount of capital that a corporation is required to maintain, as mandated by corporate laws, to protect creditors.