The Following Adjusting Journal Entry Does Not Include an Explanation

question 122

Multiple Choice

The following adjusting journal entry does not include an explanation. Select the best explanation for the entry.

• A) Record payment of fees earned.
• B) Record fees earned at the end of the month.
• C) Record fees that have not been earned at the end of the month.
• D) Record payment of fees to be earned.

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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 receiving dividends before common shareholders.

Subscriptions Receivable-Common Stock

The amount owed to a company from subscribers who have committed to buy its common stock but have not yet paid.

Common Stock Subscribed

Temporary stockholders’ equity account that records at par value stock that has been subscribed to but not fully paid for.

Organization Expense

These are initial costs incurred in the process of starting a business, such as legal fees, state fees, and promotional expenses, which may be expensed or capitalized over time.