Which of the Following Is Not a Component of Common

question 52

Multiple Choice

Which of the following is not a component of common stockholders' equity?

• A)Long-term debt
• B)Common stock
• C)Additional paid-in capital
• D)Retained earnings

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Definitions:

Initial Capital Requirements

The amount of funds required to start a business, covering costs such as land, buildings, equipment, inventory, and working capital.

Assets

Any resource that a business owns and expects to use to its benefit.

Borrowed Funds

Funds obtained through loans or credit, not from direct earnings or investments.

Leverage

The ability to finance an investment through borrowed funds, increasing both the potential for return and the level of risk.