Identify Which of the Following Statements Is True

question 22

Multiple Choice

Identify which of the following statements is true.

• A)Both a Type B reorganization or a reverse triangular merger will not allow the target corporation to remain in existence.
• B)Andrews Corporation gives 10% of its stock worth $200,000 and Andrews notes worth $10,000 in exchange for 80% of Baxter Corporation's stock. The exchange qualifies as a Type B reorganization.
• C)In a Type B reorganization, with minor exceptions, only voting stock can be used by the acquiring corporation to acquire the target corporation's stock.
• D)All of the above are false.

---

Definitions:

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the accounts for the next period.

Revenue Account Balance

The total amount of income generated from sales before any expenses are subtracted.

Expense Account Balance

The total amount recorded as expenditures by a company within a specific period, awaiting reimbursement or allocation.

Income Summary

A temporary account used in accounting to transfer revenues and expenses, summarizing the net income or loss for a period before transferring the balance to retained earnings.