You Bought Some Shares of Stock And, Over the Next

question 184

Multiple Choice

You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced

• A)both a nominal gain and a real gain, and you paid taxes on the nominal gain.
• B)both a nominal gain and a real gain, and you paid taxes only on the real gain.
• C)a nominal gain, but no real gain, and you paid taxes on the nominal gain.
• D)a nominal gain, but no real gain, and you paid no taxes on the transaction.

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Definitions:

Work Sheet

An informal document used by accountants to prepare adjusting entries and a trial balance in the process of preparing financial statements.

Unadjusted Trial Balance

A list of all the balances in a company’s accounts before any adjusting entries are made for reporting purposes.

Management Report

A document that provides managers with information necessary to make decisions, including financial and operational data.

Accounting Period

A specific time span for which financial statements are prepared, commonly a quarter or a year.