Shareholders Invest $100 000 in a Business

question 18

Multiple Choice

Shareholders invest $100 000 in a business.Inventory of $80 000 is bought on account and damaged inventory that was purchased on credit for $10 000 was returned.Equipment costing $200 000 was purchased,which was financed by a loan from the seller,repayable in 5 years.The business paid $40 000 to accounts payable.Total assets increased by:

• A) $100 000
• B) $170 000
• C) $330 000
• D) none of the above.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business, whichever is longer.

Unearned Revenues

Income received by a company for goods or services that have yet to be provided, recorded as a liability on the balance sheet.

Prepaid Expenses

Costs that are paid in advance for goods or services, which are recognized as expenses over time as the benefits are received.

Employer Payroll Taxes

Employer payroll taxes are taxes that an employer is required to pay on behalf of their employees, including Social Security and Medicare taxes in the United States.