Using the Following Balance Sheet and Income Statement Data for Castillo

question 85

Multiple Choice

Using the following balance sheet and income statement data for Castillo Company what percentage of the company is financed with equity? $$\begin{array} { l r l r } \text { Current assets } & \$ 41,000 & \text { Net income } & \$ 48,000 \\\text { Current liabilities } & 22,000 & \text { Stockholders' equity } & 75,000 \\\text { Average assets } & 210,000 & \text { Total liabilities } & 125,000 \\\text { Total assets } & 200,000 & &\end{array}$$

• A)24.3 percent
• B)35.7 percent
• C)37.5 percent
• D)62.5 percent

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its decrease in value due to use, wear and tear, or obsolescence.

Depletion

The allocation of the cost of natural resources over their productive life, commonly used in industries like mining and forestry.

Amortization

The gradual reduction of a debt or the spreading of an intangible asset's cost over its useful life.

Depreciation Expense

The allocation of the cost of a tangible fixed asset over its useful life, reflecting the asset's consumption or wear and tear.