What Happens to a Firm's Net Worth as It Uses

question 6

Multiple Choice

What happens to a firm's net worth as it uses cash to repay accounts payable?

• A) Net worth increases.
• B) Net worth decreases.
• C) Net worth remains constant.
• D) Net worth decreases temporarily, until cash is replenished.

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Definitions:

Ductile Behavior

The ability of a material to undergo significant deformation under stress before breaking, often applied to metals and geological formations.

Brittle Deformation

The breaking or fracturing of a rock under stress, without significant deformation.

Crustal Levels

Various layers within the Earth's crust, each having distinct properties and compositions.

Tectonic Forces

The movement and dynamics within the Earth's crust that result in the formation of geological features.