Which of the following equations is correct?
A) Change in cash = Change in noncash assets
B) Change in cash = Change in liabilities + Change in stockholders' equity
C) Change in cash = Change in liabilities + Change in stockholders' equity - Change in noncash assets
D) Change cash = Change in liabilities + Change in stockholders' equity + Change in noncash assets

Question

Quizplus · Accepted Answer

The correct equation for change in cash is the change in liabilities and stockholders' equity minus the change in noncash assets. This is because a decrease in noncash assets, such as inventory, will result in an increase in cash, while an increase in liabilities or stockholders' equity will result in a decrease in cash. Option A is not correct because it does not take into account changes in liabilities and stockholders' equity. Option B is not correct because it does not subtract the change in noncash assets. Option D is not correct because it adds the change in noncash assets instead of subtracting it.

Which of the Following Equations Is Correct