When Reviewing the Balance Sheet for Portable Pet Care, Inc

question 12

Multiple Choice

When reviewing the balance sheet for Portable Pet Care, Inc., a mobile small animal care business, Ricky noted the following information: Company assets totaling $3.5 million, and liabilities totaling $1.3 million. On paper, the net worth (owners' equity) for this business =

• A) $2.2 million.
• B) $4.8 million.
• C) $3.5 million.
• D) $0.2 million.

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Definitions:

Merchandise Inventory

Goods that a retail or wholesale company holds for sale to customers in the ordinary course of business.

Budgeted Balance Sheet

A financial statement that projects the financial position of a company at a future date, estimating assets, liabilities, and equity based on anticipated financial activities and plans.

Variable Operating

Refers to operating expenses that vary in direct proportion to changes in an organization's level of activity or volume.

Fixed Expenses

Costs that do not change with the volume of production or sales, such as rent, salaries, and insurance.