If the Pro Forma Balance Sheet Shows That Total Assets

question 6

Multiple Choice

If the pro forma balance sheet shows that total assets must increase by $400,000 while retaining a debt-equity ratio of .75 then:

• A) debt must increase by $300,000.
• B) equity must increase by the full $400,000.
• C) debt must increase by $171,429.
• D) equity must increase by $100,000.

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Definitions:

Motives of Vanity

The driving factors behind actions that are primarily focused on excessive pride in one's appearance or achievements.

Sake of Duty

Acting based on a sense of moral obligation rather than personal desire, interest, or consequence.

Maxim

A concise statement expressing a general truth or rule of conduct.

Rule

A prescribed guideline for conduct or action established by an authority, which governs behavior within specific contexts.