Which of the Following Journal Entries Shows the Correct Accounting

question 21

Multiple Choice

Which of the following journal entries shows the correct accounting treatment for share issue costs?

• A) Dr Deferred asset: Cr Cash
• B) Dr Cash: Cr Deferred asset
• C) Dr Share capital: Cr: Cash
• D) Dr Cash: Cr Share capital

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Definitions:

Liability Account

An account used in accounting to keep track of obligations or debts that a company owes to others, representing claims against the company's assets by external parties.

Stock Option Plans

Programs established by companies to give employees the right to purchase a specific number of the company's shares at a fixed price for a certain period of time.

Stock Appreciation Rights

A type of incentive or compensation mechanism provided to employees that gives the right to receive a bonus equivalent to the increase in the company’s stock price over a set period.

Compensatory

Refers to something intended to recompense or make up for a loss, injury, or inconvenience.