1. Secaucuss Co. has been in the business of manufacturing office supplies for the last five years. Recently, the company issued more shares to the public to raise capital for its expansion. Expanding its operations into office maintenance helped it generate additional cash inflows. Since the company expanded and issued more shares, the stockholders’ equity should also have increased. However, the stockholders’ equity went down this year.
Which of the following statements best explains why the stockholders’ equity went down??
A. ?The company collected revenue from services provided on an accrual basis.
b. ?The company employed a predatory pricing strategy to increase its market share.
c. ?The company declared a 2-for-1 stock split during the current year.
d. ?The company purchased some new machines to speed up its manufacturing process.
2. Risk varies with project type, and the least risky of the capital projects, in terms of the probability of making less than management's expectations is:
a. expansion.
b. new business ventures.
c. equipment replacement.
d. inventory management