If the Assets of a Business Increased $9,000 During a Period

question 22

Multiple Choice

If the assets of a business increased $9,000 during a period of time and its liabilities increased $5,000 during the same period, equity in the business must have

• A) Increased $14,000
• B) Decreased $14,000
• C) Increased $4,000
• D) Decreased $4,00
• E) Decreased $6,000.

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Definitions:

Debt

Money owed by one party to another under the condition that it is to be repaid, often with interest, at a later date.

Capital Structure

The mix of different forms of external funds used to finance a company's operations, such as debt and equity.

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Cost Of Debt

The effective interest rate that a company pays on its total debt, influencing its finance strategy.