At the beginning of the year, AAA-1 Towing owns trucks and buildings for a total value of $1 million.During the year, it invests $250,000 to replace towing trucks worth $230,000 destroyed in a flood and to cover $50,000 worth of depreciation.AAA-1 Towing's capital stock at the end of the year was
A) $970,000.
B) $1,250,000.
C) $950,000.
D) $1,280,000.
E) $1,020,000.

Question

Quizplus · Accepted Answer

AAA-1 Towing started with $1 million in capital stock. They invested $250,000 to replace trucks worth $230,000 and cover $50,000 in depreciation. The net effect is a decrease of $30,000 ($230,000 - $250,000 + $50,000) in capital stock, resulting in $970,000 at the end of the year.

At the Beginning of the Year, AAA-1 Towing Owns Trucks