Question

Question Completion Status: QUESTION 9 A liability is incurred when income is earned because income tax expense is created by earning income True False QUESTION 10 5 pe West Company declared a $0.50 per share cash dividend. The company has 190,000 shares issued, and 10,000 shares in treasury stock. The journal entry to record the dividend declaration is: Debit Retained Earnings $5,000; credit Common Dividends Payable $5,000. Debit Retained Earnings $90,000; credit Common Dividends Payable $90,000. Debit Common Dividends Payable $90,000; credit Cash $90,000. Debit Retained Earnings $95,000; credit Common Dividends Payable $95,000. Debit Common Dividends Payable $95,000; credit Cash $95,000 QUESTION 11 5 pol A capital deficiency means that: The partnership has been sold at a loss. The partnership has a loss. A partner has a debit balance in her capital account. The partnership has more liabilities than assets. A partner has a credit balance in her capital account. Save All Answers

Answer 1

9.

The given statement is false.

A liability is not incurred when income is earned. A liability arises when there is an obligation to pay a particular amount within a particular time period. Income tax liability arises at the end of the accounting period after the calculation of net income.

10.

Dividend declared = Number of shares outstanding x Dividend per share

= 180,000 x 0.50

= $90,000

Journal entry for dividend declared will be:

	Retained earnings	90,000
	Common dividend payable		90,000

Correct option is (b)

11.

A capital deficiency means that a partner has a debit balance in her capital account.

Correct option is (c)

Debit balance in capital account means that the capital account balance has become negative and now the partner owes money to the firm

Kindly comment if you need further assistance. Thanks