Answer true or false to each of the following. Briefly explain your reasoning for each answer. a.
Question:
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 SheetBalance 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...
Step by Step Answer:
a Answer False Explanation Shareholders equity is the claim of companys shareholders on the net assets of the company Net asset is all assets less lia...View the full answer
