Answer true or false to each of the following. Briefly explain your reasoning for each answer. a.

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Answer true or false to each of the following. Briefly explain your reasoning for each answer.

a. If a company gets into financial difficulty, it can use some of its shareholders’ equity to pay its bills for a time.

b. It is impossible for a firm to have a negative book value of equity without the firm going into bankruptcy.

c. If a company increases its dividend, its net income will decrease.

d. You can construct a sources and uses statement for 2017 if you have a company’s balance sheets for year-end 2016 and 2017.

e. The “goodwill” account on the balance sheet is an attempt by accountants to measure the benefits that result from a company’s public relations efforts in the community.

f. A reduction in an asset account is a use of cash, while a reduction in a liability account is a source of cash.

g. A company’s market value of equity must always be higher than its book value of equity.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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