How Much Is Required in External Financing If First-Stage Pro

question 95

Multiple Choice

How much is required in external financing if first-stage pro forma statements indicate $1 million in net income,$300,000 in dividends,and a $900,000 increase in total assets?

• A) $200,000
• B) $500,000
• C) $800,000
• D) No external financing is required.

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Definitions:

Unearned Revenue

Income received by an entity for services not yet provided or goods not yet delivered, reflecting a liability until fulfilled.

Common Stock

An equity security that signifies part ownership in a company, providing the owner with the right to vote and a portion of the company's earnings through dividends.

Credit

A financial term describing the ability of a buyer to receive goods or services before payment, based on the trust that payment will be made in the future.

Stockholders' Equity

The ownership interest of shareholders in a corporation, represented by the company's assets minus its liabilities.