Use the table for the question(s)below.
-If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in shareholders' equity between 2017 and 2018?
A)The company is very profitable because it is obviously collecting receivables faster.
B)The company's net income in 2018 was negative.
C)The company is selling its property, plant and equipment, which may result in a long-term deficiency in production capacity.
D)No conclusions can be drawn regarding shareholders' equity without additional information.

Question

Use the table for the question(s)below. 
-If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in shareholders' equity between 2017 and 2018?
A)The company is very profitable because it is obviously collecting receivables faster. 
B)The company's net income in 2018 was negative. 
C)The company is selling its property, plant and equipment, which may result in a long-term deficiency in production capacity. 
D)No conclusions can be drawn regarding shareholders' equity without additional information.

Quizplus · Accepted Answer

The changes in shareholders' equity indicate that the company had a net loss in 2018, as indicated by the decrease in retained earnings. Therefore, choice B is the best answer. Choices A and C are not supported by the information provided in the table, and choice D is not a suitable answer as some conclusions can be drawn from the given data.

Use the Table for the Question(s)below