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:

Scotiabank

A leading Canadian multinational bank providing a wide range of banking and financial services globally.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains.

Borrowed

The act of receiving something with the intention to return it, often referring to money in financial contexts.

Matured

Used to describe financial instruments or investments that have reached their due date for payment or realization.