If the Pro Forma Balance Sheet Shows That Total Assets

question 95

Multiple Choice

If the pro forma balance sheet shows that total assets must increase by $400,000 while retaining a debt-equity ratio of 0.75 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:

Merger Negotiations

The process of discussing and reaching an agreement on the terms of combining two or more companies into one entity.

SEC Rules

Regulations established by the U.S. Securities and Exchange Commission, which govern the securities industry and aim to protect investors, maintain fair, orderly, and efficient markets.

Disclosure

The action of making known something that was previously secret or private, often required by law in financial and legal transactions.

Regulation A

An exemption under the Securities Act, allowing smaller companies to raise capital through securities offerings with reduced regulatory requirements compared to traditional public offerings.