Sam Bought a House for $200,000

question 2

Multiple Choice

Sam bought a house for $200,000. He spent $50,000 to add a room. He sold the house for $260,000. Sam's realized gain is:

• A) $50,000.
• B) $260,000.
• C) $10,000.
• D) $150,000.

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Definitions:

Accounts Receivable

Company receivables originating from goods or services offered to customers who haven't yet completed payment.

Accounts Payable

Funds that a company is required to pay to its suppliers for products or services received but for which payment has not yet been made.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, by comparing its current assets to its current liabilities.

Net Working Capital Turnover

A measure of how effectively a company is using its working capital (current assets minus current liabilities) to generate sales.