A firm's balance sheet shows the following changes over the most recent quarter: Cash increases by $1,000,000,long-term assets increase by $3,000,000,accounts payable increase by $750,000,long-term-debt increases by $1,000,000,retained earnings increase by $1,250,000,and new equity increases by $1,000,000.Which of the following statements must be FALSE?
A)Cash was a $1,000,000 source of funds for the firm.
B)Long-term debt was a $1,000,000 source of funds for the firm.
C)The purchase of long-term assets was a use of funds by the firm.
D)Retained earnings are considered an INTERNAL source of financing.

Question

Quizplus · Accepted Answer

Cash increasing by $1,000,000 indicates that cash is an application (use) of funds, not a source.

A Firm's Balance Sheet Shows the Following Changes Over the Most