Use the table for the question(s)below.
Statement of Financial Position

-If the above statement of financial position is for a retail company,what indications about this company would best be drawn from the changes in shareholders' equity between 2014 and 2015?
A)The company is very profitable because it is obviously collecting receivables faster.
B)The company is selling its property,plant,and equipment,which may result in a long-term deficiency in production capacity.
C)The company's net income in 2015 was negative.
D)The company's enterprise value declined.
E)The company has experienced a significant rise in its market value.

Question

Use the table for the question(s)below.
Statement of Financial Position
 
-If the above statement of financial position is for a retail company,what indications about this company would best be drawn from the changes in shareholders' equity between 2014 and 2015?
A)The company is very profitable because it is obviously collecting receivables faster. 
B)The company is selling its property,plant,and equipment,which may result in a long-term deficiency in production capacity. 
C)The company's net income in 2015 was negative. 
D)The company's enterprise value declined. 
E)The company has experienced a significant rise in its market value.

Quizplus · Accepted Answer

The changes in shareholders' equity show a decrease from $3,000 in 2014 to -$2,000 in 2015. A negative shareholders' equity indicates that the company's liabilities exceed its assets, which could be a result of net losses over time. Therefore, choice C is the best selection. The other options are not supported by the information provided.

Use the Table for the Question(s)below