The Assets of a Business Total $20,000; the Liabilities, $8,000

question 202

Multiple Choice

The assets of a business total $20,000; the liabilities, $8,000. The claims of the owners are

• A) $0
• B) $8,000
• C) $12,000
• D) $20,000
• E) $28,000

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Definitions:

Acquisition Business Combination

Acquisition Business Combination involves one entity obtaining control over one or more businesses, integrating them into its operations.

Fair Values

An estimate of the market value of an asset or liability, based on assumptions of what market participants would use in an orderly transaction at the measurement date.

Common Stock

A type of equity security that represents ownership in a corporation, providing rights to vote on corporate matters and receive dividends.

Acquisition

Acquisition involves purchasing all or a substantial portion of the assets or ownership stakes of a company, effectively bringing it under the control of the acquiring entity.