​An Initial Public Offering Is

question 55

Multiple Choice

​An initial public offering is:

• A)the first sale of stock of a newly formed company to the public.
• B)the initial dividend which is paid to the shareholders of a company when the company makes a profit.
• C)a lump-sum payment given to the bondholders of a company after the first year of purchasing the bond.
• D)the initial sale of stocks of a company to a few favored enterprises at a low price.
• E)an initial investment made by the public in a company that is in financial trouble.

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Definitions:

Business Profits

The financial surplus generated from conducting business activities after all expenses have been subtracted from revenue.

Business Losses

Financial losses incurred by a business, often resulting from expenses exceeding revenues within a specific time period.

Permanent Account

An account in the general ledger that carries its ending balance over to the next accounting period.

Temporary Account

A type of financial account used in accounting to record revenues, expenses, gains, and losses within a specific accounting period, which are then transferred to permanent accounts.