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 2020 if you have a company’s balance sheets for year-end 2020 and 2021.

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 source of cash, while a reduction in a liability account is a use of cash.

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

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