Nelson Company Experienced the Following Transactions During Year 1, Its

question 17

Multiple Choice

Nelson Company experienced the following transactions during Year 1, its first year in operation. 1. Issued $12,000 of common stock to stockholders.
2) Provided $4,600 of services on account.
3) Paid $3,200 cash for operating expenses.
4) Collected $3,800 of cash from accounts receivable.
5) Paid a $200 cash dividend to stockholders.
The amount of net income recognized on Nelson Company's Year 1 income statement is:

• A) $1,400.
• B) $800.
• C) $1,000.
• D) $1,200.

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Definitions:

Authorised

Officially granted permission or power to do something within a particular scope or sphere.

Contract

A contract that is legally enforceable and entered into by two or more parties.

Unenforceable

Describes a contract or provision that is null and incapable of being upheld or enforced by law.

Principal

The original sum of money borrowed in a loan, or the amount of the investment.