Jane Company Has Excess Cash of $100,000 and Invests the Same

question 9

Multiple Choice

Jane Company has excess cash of $100,000 and invests the same amount in corporate bonds on March 30, 2015 that mature twenty years from the date of purchase. The company plans to keep the bonds until maturity. Based on the information provided, which of the following is true of the balance sheet line items on March 30, 2015?

• A)Liabilities will increase.
• B)Equity will decrease.
• C)Long-term assets will decrease.
• D)Total assets will remain unchanged.

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Definitions:

Variable Manufacturing Cost

Costs that vary with production volume, including direct materials, direct labor, and certain overheads.

Production Volume

The total quantity of units produced during a specific period.

Least-squares Regression

A statistical method used to determine the best-fitting line through a set of points by minimizing the sum of the squares of the offsets.

Squared Deviations

The squared differences between each data point in a set and the mean of that set, used in statistical analysis to measure variance.