If the Assets of a Business Increased $89,000 During a Period

question 26

Multiple Choice

If the assets of a business increased $89,000 during a period of time and its liabilities increased $67,000 during the same period, equity in the business must have:

• A) Decreased $156,000.
• B) Increased $89,000.
• C) Decreased $22,000.
• D) Increased $22,000.
• E) Increased $156,000.

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Definitions:

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Compound Interest

The addition of interest to the principal sum of a loan or deposit, where the interest that has been added also earns interest.

Equal Payments

A repayment structure where payments are the same amount each period, as seen in some loans and mortgages.

Annuity Due

An annuity whose payments are made at the beginning of each period.