Which of the Following Is Descriptive of the Proper Form

question 50

Multiple Choice

Which of the following is descriptive of the proper form of a balance sheet?

• A) The heading sets forth the period of time covered.
• B) Cash is always the first asset listed, followed by permanent assets (such as land and buildings), and finally by assets such as receivables and supplies.
• C) Liabilities are listed before equity.
• D) A subtotal for total assets plus total liabilities is shown.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, registration, and printing fees.

New Equity

Funds raised by a company through the issuance of additional shares of stock, contributing to its equity capital.

Constant Rate

A fixed percentage or amount that does not change over a specified period.

Cost of Capital

The return rate that a company must achieve in order to justify the cost of an investment, essentially the cost of obtaining the funds necessary for financing a project or investment.