Question

Mary recently purchased a boutique. When she bought the boutique, its market value and book value were equal. Included in the purchase were the building, fixtures, and inventory. Which of the following might have caused the market value of this boutique to be less than its book value?

Multiple Choice
A sudden and unexpected increase in inflation
The replacement of old inventory items with more desirable products
A sudden and unexpected Increase in Inflation
The replacement of old Inventory items with more desirable products Improvements to the surrounding area by other store owners Construction of a new restricted access highway located between the boutique and the surrounding residential areas
Addition of a stop light at the main entrance to the boutique's parking lot

Answer 1

A sudden and unexpected increase in inflation

Construction of a new restricted access highway located between the boutique and the surrounding residential areas.

Explanation: Book value is an accounting which is used to be the total worth of a company if it is liquidated all its assets and paid all its liabilities.

Market value also called open market value is the worth of a company if it is made available for sale in an open market setting. It represents how people or other Organisations value a company especially in financial terms. Market value is affected by the Perception of people outside the organization.