An Investor Puts Up $5 000 but Borrows an Equal

question 20

Multiple Choice

An investor puts up $5 000 but borrows an equal amount of money from their broker to double the amount invested to $10 000. The broker charges 7% on the loan. The shares were originally purchased at $25 per share and in one year the investor sells the shares for $28. The investor's rate of return was ________.

• A)17%
• B)12%
• C)14%
• D)19%

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Definitions:

Accrued Revenue

Income earned but not yet received, representing goods or services provided to customers on credit.

Supplies Used

The total value or quantity of materials and supplies consumed during a production or operational period.

End-Of-Period Adjusting Entries

Entries recorded in journals at the close of an accounting cycle to refresh the balances of accounts prior to the compilation of financial statements.

Supplies Account

An account used in accounting to track the amount spent on supplies that have not yet been used.