If a Firm Sells a Total of 100 Shares of Stock,then

question 26

Multiple Choice

If a firm sells a total of 100 shares of stock,then

• A)each share represents 1 percent of the firm's indebtedness.
• B)each share represents ownership of 1 percent of the firm.
• C)the firm is engaging in term finance.
• D)All of the above are correct.

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Definitions:

Accounting Cycle

The series of steps in processing financial transactions, from the initial recording to the preparation of financial statements.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Current Liabilities

Financial commitments that need to be settled within a year or during the regular operation period of a company.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.