A company retains all its earnings for the year and uses the money to purchase equipment. Which of the following is correct?
a) Profits equal zero for the year
b) Book value at the end of the year is greater than at the beginning
c) Book value at the end of the year is lower than at the beginning
d) Book value at the end of the year is the same as at the beginning
Answer: b) Book value at the end of the year is greater than at the beginning
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Fill in the blank(s) with the appropriate word(s).