A business leases all its long-term operating assets (buildings, machines, vehicles, and so on). Thus, it has no depreciation expense. For the year just ended, the business recorded $2,450,000 total expenses. Expenses caused $75,000 increase in operating liabilities. Inventory increased $45,000 during the year. How did expenses change the financial condition of the business?
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Condensed Balance Sheet |
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Cash |
Operating liabilities |
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Receivables |
Interest-bearing liabilities |
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Inventory |
Owners’ invested capital |
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PP&E, net |
Owners’ retained earnings |
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Assets |
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Liabilities and Owners’ Equity |