Sam Sung and Mitchell Vaughn Are Partners, and Each Has

question 113

Multiple Choice

Sam Sung and Mitchell Vaughn are partners, and each has a capital balance of $60,000. To gain admission to the partnership, Amanda Scott pays $42,000 directly to Vaughn for one-half of his equity. Scott's capital account will reflect an equity interest of:

• A)$60,000.
• B)$30,000.
• C)$42,000.
• D)$40,000.

---

Definitions:

Repurchase Outstanding

A corporate finance strategy where a company buys back its own shares from the marketplace, reducing the number of outstanding shares.

Current Ratio

A ratio that determines a company's capacity to fulfill immediate financial commitments using its present assets.

Total Debt Ratio

A financial metric that compares the total debt of a company to its total assets, indicating the leverage and financial risk of the company.

Liquidity Ratios

Financial ratios that measure a company's ability to meet its short-term obligations with its liquid assets.