A Printing Company Prints a Brochure for a Client and Then

question 8

Multiple Choice

A printing company prints a brochure for a client and then bills them for this service. At the time the printing company's financial disclosure statements are prepared, the client has not yet paid the bill for this service. How will this transaction be recorded?

• A) The sale will be added to Net Income on the income statement and retained in Net Income on the statement of cash flows.
• B) The sale will be added to Net Income on the income statement but deducted from Net Income on the statement of cash flows.
• C) The sale will not be added to Net Income on the income statement but added to Net Income on the statement of cash flows.
• D) The sale will neither be added to Net Income on the income statement nor used to adjust Net Income on the statement of cash flows.

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Definitions:

Owner Control

The extent to which the owners of a business have the power to make decisions and influence the company's operations and strategic direction.

Bonds

Fixed income investments representing loans made by an investor to a borrower, typically corporate or governmental, which pay interest at predetermined intervals.

Notes Payable

A written agreement where the borrower promises to pay back a certain amount of money, under specific terms, to the lender at a future date.

Unamortized Discount

The portion of a bond's issue price that is below its face value and has not yet been amortized over the life of the bond.