Firm A purchases $150,000 in inventory using 40% cash and 60% Accounts Payable. Which of the...

Firm A purchases $150,000 in inventory using 40% cash and 60% Accounts Payable. Which of the following statements is false?

		Firm A's shareholder equity was unaffected
		Firm A's current assets decreased by $60,000
		Firm A's inventory increased by $150,000
		Firm A's liabilities increased by $90,000

A client purchases $200,000 worth of goods and pays 25% cash. Which of the following statements is true?

		Current assets increase by $200,000
		Liabilities increase by $150,000
		Shareholder’s equity increases by $50,000
		Account receivable decreases by $150,000

Solutions

Expert Solution

1. The overall current asset of the company has increased by 90,000((150000-(150000*40%)).

All the other statements in records to current asset and inventory and liability are true.

Correct answer will be option (B) current asset of firm A has decreased by $60,000.

2. Liabilities are going to increase by (200000*75%)= 1,50,000.

All the other statements are false.

Correct answer will be option (B) liability is increased by 150000.

jeff jeffy answered 1 year ago

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