An Organization's Balance Sheet Indicates That the Total Asset Amount

question 250

Multiple Choice

An organization's balance sheet indicates that the total asset amount and the total capital stock amount remained unchanged from one year to the next, and no dividends were declared or paid. However, the organization reported a loss of $200,000. Which of the following describes the most likely year-over-year change to the organization's total liabilities and total stockholder equity?

• A) The total liabilities and total stockholder equity both increased.
• B) The total liabilities and total stockholder equity both decreased.
• C) The total liabilities decreased, and the total stockholder equity increased.
• D) The total liabilities increased, and the total stockholder equity decreased.

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Definitions:

Prices

The amount of money required to purchase a good, service, or asset.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs.

Price-Taking Firms

Companies that accept the market price as given and have no power to influence that price due to competition and market structure.

Economic Profit

Profit calculated by subtracting both explicit and implicit costs from total revenues, providing a more complete measure of real profitability.