What Happens to a Firm Whose Uses of Cash Exceed

question 71

Multiple Choice

What happens to a firm whose uses of cash exceed its sources of cash during an accounting period?

• A) It has a loss of net working capital.
• B) It declares a net loss on the income statement.
• C) It experiences a decrease in sales.
• D) It experiences a decrease in its cash balance.

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Definitions:

Revenues And Profits

Financial terms where 'revenues' refer to the total income generated from normal business operations, and 'profits' signify the remaining income after all expenses have been deducted.

Intermediate Court

A level of court between the lower courts and the highest courts, typically involved in hearing appeals from decisions of lower courts.

Jointly And Severally Liable

A legal term describing a situation where two or more parties can be held responsible individually or together for a debt or liability.

General Partners

Partners in a partnership who have full liability for the debts of the partnership and are involved in the management of the business.