The most recent comparative balance sheet of Benefield Corporation appears below:
-Which of the following classifications of changes in balance sheet accounts as sources and uses is correct?
A) The change in Property, Plant, and Equipment is a source; The change in Long-Term Debt is a use
B) The change in Property, Plant, and Equipment is a use; The change in Long-Term Debt is a source
C) The change in Property, Plant, and Equipment is a source; The change in Long-Term Debt is a source
D) The change in Property, Plant, and Equipment is a use; The change in Long-Term Debt is a use

Question

The most recent comparative balance sheet of Benefield Corporation appears below: 
-Which of the following classifications of changes in balance sheet accounts as sources and uses is correct?
A) The change in Property, Plant, and Equipment is a source; The change in Long-Term Debt is a use 
B) The change in Property, Plant, and Equipment is a use; The change in Long-Term Debt is a source 
C) The change in Property, Plant, and Equipment is a source; The change in Long-Term Debt is a source 
D) The change in Property, Plant, and Equipment is a use; The change in Long-Term Debt is a use

Quizplus · Accepted Answer

An increase in Property, Plant, and Equipment means that the company used cash to purchase new assets, making it a use of cash. An increase in Long-Term Debt means that the company received cash from borrowing, making it a source of cash. Therefore, the change in Property, Plant, and Equipment is a use and the change in Long-Term Debt is a source, which is stated in option B.

The Most Recent Comparative Balance Sheet of Benefield Corporation Appears