If Stock Is Issued for an Asset Other Than Cash

question 14

Multiple Choice

If stock is issued for an asset other than cash, the asset should be recorded on the books of the corporation at:

• A) fair market value.
• B) cost.
• C) par value of the stock.
• D) zero.

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Definitions:

Net Profit Margin

A financial metric that shows the percentage of revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends are deducted.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Debt-to-equity Ratio

A financial ratio highlighting the use of debt versus equity in the capital structure supporting a company's assets.

Times Interest

A financial ratio indicating how many times a company can cover its interest payments with its earnings before interest and taxes.