A Printing Company Prints a Brochure for a Client, and Then

question 73

Multiple Choice

A printing company prints a brochure for a client, and then bills them for this service. At the time the printing company's financial disclosure statements are prepared, the client has not yet paid the bill for this service. How will this transaction be recorded?

• A)The sale will be added to Net Income on the income statement and retained in Net Income on the statement of cash flows.
• B)The sale will be added to Net Income on the income statement but deducted from Net Income on the statement of cash flows.
• C)The sale will neither be added to Net Income on the income statement nor used to adjust Net Income on the statement of cash flows.
• D)The sale will not be added to Net Income on the income statement but added to Net Income on the statement of cash flows.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Right To Vote

The entitlement to participate in making a decision by casting a vote, commonly seen in democratic processes and corporate settings.

Dividends In Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before dividends can be issued to common shareholders.