If Teresa Purchases a Share of Stock for $15 and Three

question 194

Multiple Choice

If Teresa purchases a share of stock for $15 and three years later sells it for $60, she will realize a

• A) dividend of $45.
• B) dividend of $60.
• C) capital gain of $45.
• D) capital gain of $60.

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Definitions:

Accounting Period

A specific time period at the end of which an entity prepares financial statements to assess its financial performance and position.

Budgeting

The process of creating a plan to spend your money, allocating the estimated income towards various categories of expenses.

Financial Statements

Summary reports that convey the financial activities and condition of a business or individual.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.