When net capital spending is a negative value, the firm has:
A) Depreciation expense which exceeds the cost of new assets acquired.
B) Acquired more fixed assets than it has current assets.
C) Sold more fixed assets than it acquired during a stated period of time.
D) Reduced its total assets during the course of the year.
E) Reduced its investment in inventory.

Question

Quizplus · Accepted Answer

Net capital spending being negative indicates that a company has sold more fixed assets than it acquired during a specific period, not necessarily that it has reduced total assets or specifically inventory.

When Net Capital Spending Is a Negative Value, the Firm