Practice Quiz

CPA Accountant Review Questions

Category - Accounting

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Cartman’s Cats has $1,000,000 in assets after purchasing Big Bertha’s Birds, along with $500,000 in liabilities. It has 500 shares capital stock outstanding. What is the book value of each share of stock?
  1. $1,000
  2. $50
  3. $500
  4. $2,000
  5. $500,000
Explanation
Answer: A - The book value of each share of stock is $1,000:

1,000,000 − 500,000 = 500,000
500,000 / 500 = $1,000

Key Takeaway: The book value of stock = assets − liabilities. To calculate the per share book value, divide the book value by the number of shares.
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