00:01
The current problem wants us to select the correct statement regarding balance sheet information.
00:16
So we have option a, b, c, and d.
00:24
So we'll start with a.
00:26
A says inventory decreases as debt decreases.
00:31
Increases.
00:45
So to kind of get an idea about how this could happen, if our inventory increased, that would mean that we purchased inventory.
00:59
And the only way to purchase inventory and affect a debt account would be to purchase inventory on credit.
01:06
But if we purchased inventory on credit, that would increase debt.
01:13
So we know that option a is not correct.
01:18
The next option is cash increases as debt decreases.
01:33
So a scenario where debt was to decrease in relationship to cash, we would have to actually pay down debt for the debt to decrease.
01:48
And if we pay down debt, we would use cash...