With Respect to the Balance Sheet, an Increase in Equity

question 7

Multiple Choice

With respect to the balance sheet, an increase in equity of $2,000 with an increase in net income to $2,500, leads us to believe:

• A)The firm paid a dividend of $500
• B)The firm plowed $500 back into the company
• C)$500 went into retained earning
• D)Debt increased by $2,000

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Definitions:

Present Values

The value today of a future sum of money or cash flows, when calculated at an agreed-upon return rate.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Interest Rate

The percentage charged on borrowed money, or earned through deposited funds, over a period of time.

Lottery

A form of gambling that involves the drawing of numbers at random for a prize.