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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Which of the following is true?

a. An increase in cash may result from an increase in liabilities.

b. An increase in cash may result from a decrease in stockholders’ equity.

c. An increase in cash may result from an increase in noncash assets.

d. A decrease in cash may result from an increase in liabilities.

To determine

Introduction:

Cash flow" is a standout amongst the most fundamental components in the survival of a business. It tends to be certain, or negative, which is clearly a most unwanted circumstance. The part builds up the idea of cash flow and afterward indicates how the assets can be utilized in the business. Assets are not just created inside; they might be remotely produced; thus, the part completes with an exchange of remotely produced assets.

To choose:

Which of the following is true?

Explanation

Explanation for correct answers:

Option a) An increase in cash may result from an increase in liabilities, if a company taking the loan amount form the bank then the company increase the cash and also increase the liabilities.

Explanation for incorrect answers:

Option b) An increase in cash may result form a decrease in stockholder, this is impossible suction for business, if company’s cash increase then equity share profit increase...

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