Please say if statement is true or false. thanks.?

1. An increase in an asset account is a source of cash, whereas an increase in a liability account is a use of cash.





2. Depreciation, as shown on the income statement, is regarded as a use of cash, because it is an expense.





3. If a firm borrows money from a bank or reduces its level of inventory these are both examples of sources of funds.





4. When a firm pays off a loan using cash, the source of funds is the decrease in the asset account, cash, while the use of funds involves a decrease in a liability account, debt.





5. Retained earnings are the cash that has been generated by the firm through its operations which has not been paid out to stockholders as dividend. Retained earnings are kept in cash or near cash accounts and thus, these cash accounts, when added together, will always be equal to the total retained earnings of the firm.





6. If a firm has high current and quick ratios, this is always a good indication that a firm is managing its liquidity position well.Please say if statement is true or false. thanks.?
1. False. Increasing assets other than cash, call for cash to be spent.





2. False. Depreciation is an expense wherein no cash was spent, so on the cash flow, it is considered an add back and therefore, a source of cash.





3. True





4. False. The cash balance changing is not a source or use, it is what the cash flow statement is used for. So cash in or out is the final part.





5. False. Retained earnings is Assets - Liabilities, for the most part. Most of your retained earnings could be tied up in fixed assets, which are not liquid. The sum of cash accounts rarely equals retained earnings.





6. False. Always kills this one. Most companies usually want to increase their liquidity ratios, but not always. Liquidity ratios can be too high. If your ratios are very high, that means you probably aren't using your cash wisely. Your assets should be working for you in growing your business. If they are just sitting in a bank account, why have the business?Please say if statement is true or false. thanks.?
Is this an exam?
I have no problem to fail this test
This question relates to cash flow.





Check this site.