Use the Table for the Question(s) Below -The Above Diagram Shows a Balance Sheet for a Certain

question 17

Multiple Choice

Use the table for the question(s) below.
$\begin{array} { l } \text { Balance Sheet }\\\begin{array} { l } \text { Assets}& \text { Liabilities}\\\begin{array}{l}\text { Current Assets }\\\hline\text { Cash } & 50 \\\text { Accounts receivable } & 22 \\\text { Inventories } & 17 \\\text { Total current assets } & 89\\\end{array}&\begin{array}{l}\text { Current Liabilities }\\\hline\text { Accounts payable } & 42 \\\text { Notes pavable/short-term debt } & 7\\\\\text { Total current liabilities }&49\\\end{array}\\\\\begin{array}{ll}\text {Long-Term Assets }\\\hline\text {Net property, plant, }\\\text { and equipment } & 121 \\ \text { Total long-term assets } & 121\\\\\\\text { Total Assets }&210\\\\\end{array}&\begin{array}{ll}\text { Long-Term Liabilities }\\\hline\\\text { Long-term debt } & 128 \\\text { Total long-term liabilities } & 128 \\\text { Total Liabilities } & \mathbf{1 7 7} \\\text { Shareholders' Equity } & 33 \\\text { Total Liabilities and } & 210 \\\text { Shareholders' Equity } &\end{array}\end{array}\end{array}$

-The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. How would the balance sheet change if the company's long-term assets were judged to depreciate at an extra $5 million per year?

• A) Long-Term Liabilities would rise to $182 million, and Total Liabilities and Shareholders' Equity would be adjusted accordingly.
• B) Net property, plant, and equipment would rise to $126 million, and Total Assets and Shareholders' Equity would be adjusted accordingly.
• C) Net property, plant, and equipment would fall to $116 million, and Total Assets and Shareholders' Equity would be adjusted accordingly.
• D) Long-Term Liabilities would fall to $172 million, and Total Liabilities and Shareholders' Equity would be adjusted accordingly.

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Definitions:

Terabytes

A unit of digital storage measurement equal to approximately one trillion bytes, often used to specify the size of large data or disk capacities.

Megabytes

A unit of digital information storage equal to 1,024 kilobytes or approximately 1 million bytes.

Kilobytes

A unit of digital information equal to 1,024 bytes, used to measure the size of data files and storage capacity.

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