Problem

True or false?a. If a company gets into financial difficulty, it can use some of itsshareh...

True or false?

a. If a company gets into financial difficulty, it can use some of itsshareholders’ equity to pay its bills for a time.


b. It is impossible for a firm to have a negative book value of equitywithout the firm going into bankruptcy.


c. You can construct a sources and uses statement for 2013 if you havea company’s balance sheets for 2012 and 2013.


d. The “goodwill” account on the balance sheet is an attempt by ac­countants to measure the benefits that result from a company’spublic relations efforts in the community.


e. A reduction in an asset account is a use of cash, while a reduction ina liability account is a source of cash.

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Solutions For Problems in Chapter 1