A New Firm Issued $500 in Common Stock

question 180

Multiple Choice

A new firm issued $500 in common stock. At the end of the first year, the firm had total assets of $1100 and total debt of $400. What was the amount of net income for the first year, assuming the firm paid no dividends?

• A) -$200 (a loss)
• B) $200
• C) $700
• D) $1200
• E) Cannot be determined from the information provided

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Definitions:

Qualifications

The skills, experience, and education that make an individual suitable for a particular job or activity.

Skills

Abilities or expertise which can be developed through practice and learning.

Knowledge

The understanding, awareness, or familiarity gained through experience or education.

PAIBOC Analysis

A method used in business communication to assess the Purpose, Audience, Information, Benefits, Objections, and Context of a message or strategy.