Are All Decreases to Cash the Result of an Unfavorable

question 9

Multiple Choice

Are all decreases to cash the result of an unfavorable situation?

• A)Yes, decreases to cash are always bad.
• B)No, cash could decrease as a result of acquiring long-term assets which the company needs to expand or stay competitive.
• C)Yes, cash could decrease as a result of paying off long-term debt which is an unfavorable action to take.
• D)No, cash could decrease because the company issued more stock.

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Definitions:

Partnership

A legal form of business operation between two or more individuals who share management and profits.

Sole Proprietorship

A business structure where a single individual owns, operates, and is responsible for all aspects of the business.

Partnership

An authorized business entity run by two or more partners who equally divide management duties and earnings.

Limited Partnership

A business structure where at least one partner has unlimited liability and other partners have liability limited to the amount of their investment.