A Firm's Balance Sheet Shows the Following Changes Over the Most

question 55

Multiple Choice

A firm's balance sheet shows the following changes over the most recent quarter: Cash increases by $1,000,000,long-term assets increase by $3,000,000,accounts payable increase by $750,000,long-term-debt increases by $1,000,000,retained earnings increase by $1,250,000,and new equity increases by $1,000,000.Which of the following statements must be TRUE?

• A)Cash was a $1,000,000 source of funds for the firm.
• B)Long-term debt was a $1,000,000 source of funds for the firm.
• C)Because retained earnings increased by more than $500,000,the firm could not have realized a profit for the quarter.
• D)All of the new equity must have been provided by investors who were not shareholders prior to the issuance of new equity.

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