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1. Retained earnings are part of the stockholders' equity in a corporation. a. True b. False 2. If a firm sells inventory at cost for

1. Retained earnings are part of the stockholders' equity in a corporation.

2. If a firm sells inventory at cost for cash, its total assets rise.

4. If a firm has retained earnings, it has an equal amount of cash.

5. The sum of a firm's liabilities and equity equals the sum of its assets.

6. Retained earnings represents the earnings accumulated by the firm over its life.

7. Accounts receivable are adjusted for doubtful accounts (i.e., accounts that may not be paid).

9. Issuing new stock or borrowing from a bank is a cash inflow.

10. An increase in accounts payable is a cash outflow.

11. If liabilities are decreased or assets increased, that generates a cash inflow.

12. If a firm's current assets and current liabilities decline, the firm had a cash inflow.

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