If a Company Issues Common Stock for $40,000 and Uses

question 189

Multiple Choice

If a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck,

• A)assets will be increased by $10,000.
• B)equity will be reduced by $40,000.
• C)assets will be increased by $40,000.
• D)assets will be unchanged.

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Definitions:

MacPherson v. Buick

A landmark court case that established the principle that manufacturers owe a duty of care to not only the purchasers of their products but also to the users.

Foreseeable Plaintiff

A concept in tort law referring to an individual who could be reasonably expected to be harmed by the defendant's actions or negligence.

Duty Of Care

Duty of care is a legal obligation imposed on individuals to take reasonable care of others to avoid causing harm or loss.

Manufacturing Defect

A flaw in a product that arises from a mistake in the manufacturing process, making it dangerous or defective.