A Company Was Formed with $300,000 Cash Contributed by Its

question 19

Multiple Choice

A company was formed with $300,000 cash contributed by its owners in exchange for common stock.The company borrowed $150,000 from a bank.The company purchased $50,000 of inventory and paid cash for it.The company also purchased $350,000 of equipment by paying $50,000 in cash and issuing a note for the remainder. What is the amount of the total assets to be reported on the balance sheet?

• A)$750,000
• B)$800,000
• C)$450,000
• D)$400,000

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Definitions:

Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity, indicating the proportion of equity and debt used to finance the company's assets.

Comparative Financial Statement

Financial statements that provide a comparison of a company's financial performance over multiple periods.

Common-Size Financial Statement

A financial analysis tool that expresses each line item as a percentage of a common base figure.

Vertical Analysis

A financial analysis method that compares different items on a financial statement to a single base figure, providing insights into the composition of those figures.