Consider the following balance sheet for Games Inc Because Games has

Question

Consider the following balance sheet for Games Inc. Because Games has $800,000 of retained earnings, we know that the company would be able to pay cash to buy an asset with a cost of $200,000.

Cash $50,000 Accounts payable $100,000

Inventory $200,000 Accruals $100,000

Accounts receivable $250,000 Total CL $200,000

Total CA $500,000 Long-term debt $200,000

Net fixed assets $900,000 Common stock $200,000

Retained earnings $800,000

Total assets $1,400,000 Total L & E $1,400,000

a. True

b. False

Answer

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