Examlex

Solved

Park & Company Was Recently Formed with a $5,000 Investment

question 49

Multiple Choice

Park & Company was recently formed with a $5,000 investment in the company by shareholders.The company then borrowed $2,000 from a local bank,purchased $1,000 of supplies on account,and also purchased $5,000 of equipment by paying $2,000 in cash and signing a promissory note for the balance.Based on these transactions,the company's total assets are:


Definitions:

Market Price

The current market quote for the sale or purchase of an asset or service.

Debt-equity Ratio

A calculation showing how much a firm relies on borrowed funds, determined by dividing the sum of its obligations by the equity of its shareholders.

Pre-tax Cost

The cost of an investment or expense before any taxes are applied, often considered when evaluating investment options.

Cost of Equity

The presumed income given to a firm's equity investors to reimburse them for the risk undertaken with their investment.

Related Questions