RUFF 5ANDPAPER CO -The Firm May Have Increased Long-Term Debts to Finance

Multiple Choice

RUFF 5ANDPAPER CO.
Balance Sheets
For the Years Ended 2002 and 2003

$\begin{array}{lrr}&2003&2002\\\hline\text { Assets }\text { Cash } & 800 & 600 \\\text { Marketable securities } & 200 & 200 \\\text { Accounts receivable } & 1,200 & 1,000 \\\text { Inventories } & 2,000 & 1,800 \\\text { Gross fixed asset } & 3,000 & 2,800\\\text { Less Accumulated amortization }&1,000&800\\\text { Net fixed assets }&2,000&2,000\\&---&---\\\text { Total assets }&6,200&5,600\\\\\text { Liabilities }\\\text { Accounts payable } & 200 & 100 \\\text { Notes payable } & 800 & 900 \\\text { Accruals } & 100 & 100 \\\text { Long-term debt } & 2,000 & 1,500\\\text { Stockholders' equity }\\\text { Common stock } & 2,500 & 2,500 \\\text { Retained eamings } & 600 & 500\\&---&----\\\text { Total liabilities and equity }&6,200&5,600\end{array}$
-The firm may have increased long-term debts to finance

A) a decrease in notes payable.
B) an increase in current assets.
C) an increase in current assets, an increase in gross fixed assets, and a decrease in notes payable.
D) an increase in gross fixed assets.