You purchase 50 of the 50,000 issued shares of Trainco Ltd, for $100. The company goes bankrupt. Creditors claim $5,000,000. How much is your liability?
A) All you lose is the $100 investment you made
B) $5,000
C) $5,000,000
D) It depends on whether the creditors decide to sue you.
E) Zero, since your investment is a first claim on the assets of the corporation.
A
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If an investor can use accounting information for two different companies to evaluate the types and amounts of expenses, the information is said to have the quality of
a. Comparability b. Consistency c. Neutrality d. Understandability
Wiggins Company's flexible budget for 25,00 . units shows $75,00 . and $25,00 . in variable and fixed costs, respectively. At 35,00 . units, the flexible budget would show:
a. Variable costs of $100,00 . and fixed costs of $25,000. b. Variable costs of $90,00 . and fixed costs of $30,000. c. Variable costs of $75,00 . and fixed costs of $30,000. d. Variable costs of $105,00 . and fixed costs of $25,000.