Consider the following balance sheet, for Facebook Inc. Facebook has $600,000 of retained earnings (Equity), we know that Facebook would be able to pay cash to buy an asset with a cost of $400,000.

Cash $ 40,000 Accounts payable $ 100,000

Account Receivable 350,000 Wages payable 100,000

Inventory 310,000 Accruals 100,000

Total Current Assets 700,000 Total Current Liabilities 300,000

Long-Term Debt 200,000

Net fixed assets $ 800,000 Common stock 400,000

Retained Earnings 600,000

Total assets $1,500,000 Total Lia & Equity $1,500,000

True

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