When Shares of Stock Held as an Investment Are Sold

question 65

Multiple Choice

When shares of stock held as an investment are sold, the difference between the proceeds and the carrying amount of the investment is recorded as a(n)

• A) prior period adjustment
• B) operating income and losses
• C) paid-in capital addition
• D) gain or loss

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Definitions:

Incorporation

The process of legally declaring a corporate entity as separate from its owners.

Mandatory Dividend Provisions

Rules or clauses within a company's charter or bylaws that require the company to pay dividends to its shareholders under certain conditions.

Corporate Laws

Regulations and legal principles dealing with the formation, operation, and dissolution of corporations.

Legal

Pertains to the system of rules that are created and enforced through social or governmental institutions to regulate behavior.