When Employees Exercise Their Employee Stock Options, the Firm Debits

question 61

Multiple Choice

When employees exercise their employee stock options, the firm debits _____ for the proceeds, debits _____ for any amounts credited to that account, credits _____ for the par value of the shares issued and credits _____ for any excess of the cash received plus the amount amortized over the par value of the shares issued.

• A)Cash; Additional Paid-In Capital (Stock Options); Common Stock; Additional Paid-In Capital
• B)Cash; Additional Paid-In Capital; Common Stock; Additional Paid-In Capital (Stock Options)
• C)Common Stock; Additional Paid-In Capital (Stock Options); Cash; Additional Paid-In Capital
• D)Common Stock; Additional Paid-In Capital; Cash; Additional Paid-In Capital (Stock Options)
• E)Additional Paid-In Capital (Stock Options); Common Stock; Additional Paid-In Capital; Cash

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Definitions:

Dividends Paid

The portion of a company's earnings distributed to shareholders, usually on a regular basis.

Operating Expenses

The costs related to the day-to-day operations of a business, excluding cost of goods sold.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods a company has sold during a period.

Taxable Income

The portion of individual or corporate income subject to taxation, after all deductions and exemptions.