If cash increases during a year, it must mean that:
A) There was positive profit on the income statement.
B) Retained earnings increased.
C) The net worth of a company increased.
D) None of the three statements above must necessarily be true.

Question

Quizplus · Accepted Answer

An increase in cash does not necessarily mean there was a profit, an increase in retained earnings, or an increase in net worth. Cash can increase due to various reasons such as loans, selling assets, or issuing stock.

If Cash Increases During a Year, It Must Mean That