1. A firm has positive net income and a non-zero plowback ratio. Which of the following statements is true?

A. The firm's equity will only increase if they issue shares of stock.

B. The firm's equity will definitely increase, no matter what.

C. If the company issues no new shares of stock, its equity will increase.

D.The firm has no additions to retained earnings.

2. At the beginning of the year, a firm has net fixed assets of $5,000 and accumulated depreciation of $1,500. At the end of the year, the firm has net fixed assets of $6,000. Which of the following statements MUST be true.

A. The firm sold fixed assets during the year.

B.The firm depreciated assets during the year.

C.There was no depreciation applied during the year.

D.The firm purchased fixed assets during the year.