In a Rising Stock Market, the Result of Any Subsequent

question 33

Multiple Choice

In a rising stock market, the result of any subsequent sale of a firm's previously issued common shares from one investor to another (such as occurs on public stock exchanges) :

• A)the total paid-in capital amount reported on a balance sheet will usually be less than the current market value of the common shares.
• B)the total paid-in capital amount reported on a balance sheet will usually be greater than the current market value of the common shares.
• C)the total paid-in capital amount reported on a balance sheet will usually be equal to the current market value of the common shares.
• D)the total paid-in capital amount reported on a balance sheet will be eliminated.
• E)None of these answer choices is correct.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business that are not directly tied to the production of goods or services.

Current Assets

Resources anticipated to be turned into cash, liquidated, or utilized within a 12-month period or over the length of the business's operational cycle, whichever duration is more extended.

Fixed Assets

Long-term tangible assets used in the operations of a business that are not expected to be converted to cash in the short term, such as buildings, machinery, and equipment.

Amortization Expense

The portion of the cost of a fixed asset deducted from revenue over its useful life for accounting purposes.