The Controller for Tires and More,Inc

question 114

Multiple Choice

The controller for Tires and More,Inc.has recorded the following transactions during the month: the company was established by selling 10,000 shares of stock to the public for $20,000 on the 1st of the month;the company recorded $36,000 of revenue for tires and services provided during the month;and expenses of $22,000 were recorded for the month.Additionally,on the last day of the month the company declared dividends of $2,000.What is the balance of Stockholders' Equity at the end of the month,and is the balance a debit or a credit?

• A)$32,000 debit.
• B)$32,000 credit.
• C)$18,000 credit.
• D)$36,000 debit.

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Definitions:

Variable Costing

An accounting method where only the variable production costs are allocated to the product, while fixed costs are treated as period costs.

Net Operating Income

The total income from operations of a company before taxes and interest deductions.

Variable Costing

An accounting strategy that only accounts for variable production expenditures (direct materials, direct labor, and variable manufacturing overhead) in product pricing.

Unit Product Cost

The total cost (both direct and indirect) to produce a single unit of product, often used to set selling prices and assess profitability.