Which of the Following Identities Is FALSE

question 60

Multiple Choice

Which of the following identities is FALSE?

• A)Change in Equity = Paid-in-Surplus - Net New Borrowing from Creditors
• B)Net New Borrowing = Ending Long-term Liabilities - Beginning Long-Term Liabilities
• C)Cash Flow to Owners = Dividends - Net New Borrowing from Owners
• D)Net New Borrowing from Owners = Change in Equity

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Definitions:

Sham

A pretense or fake transaction intended to deceive others or for a purpose contrary to law or public policy.

Lack of Consideration

A situation in contract law where an agreement lacks the exchange of something of value, rendering the contract potentially unenforceable.

Conditional Promises

Commitments that are contingent upon the occurrence of a specified event or situation.

Mutual Consideration

The exchange of value or promises that each party agrees to in a contractual agreement.