An Increase in Total Assets

question 39

Multiple Choice

An increase in total assets:

• A)means that net working capital is also increasing.
• B)requires an investment in fixed assets.
• C)means that shareholders' equity must also increase.
• D)must be offset by an equal increase in liabilities and shareholders' equity.
• E)can only occur when a firm has positive net income.

---

Definitions:

Equity Method

An accounting technique used by companies to assess their investments in other companies, recognizing income and changes in investment value proportionate to ownership level.

Consolidated Balance Sheet

A financial statement that aggregates the financial position of a parent company and its subsidiaries, presenting it as one single entity.

Consolidation Elimination

The process of removing internal transactions and balances between entities within a single group to prepare consolidated financial statements.

Equity Method

An accounting technique used to record investments in affiliate companies where the investor has significant influence but not full control, typically between 20% and 50% ownership.