Stanley Operates a Restaurant as a Sole Proprietorship

question 118

Multiple Choice

Stanley operates a restaurant as a sole proprietorship. Which of the following items are capital assets in the hands of Stanley?

• A) The restaurant's tables and chairs.
• B) A portable sound system used to play "theme music" for the restaurant.
• C) The restaurant building that is an asset of the sole proprietorship.
• D) An interest-bearing savings account used to keep the restaurant's excess cash.
• E) None of the above.

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Definitions:

Interest Rate

The percentage rate at which interest is charged on a loan to the borrower, often expressed as an annual figure relative to the outstanding loan sum.

Present Value

The modern-day worth of a forthcoming sum of money or flow of cash payments, using a set rate of return for calculation.

Received

The action of being given or awarded something.

Marginal Product

the increase in output resulting from the use of one more unit of a variable input, holding all other inputs constant.