1. Market values:

reflect expected selling prices given the current economic situation.

are affected by the accounting methods selected.

are equal to the initial cost minus the depreciation to date.

either remain constant or increase over time.

are equal to the greater of the initial cost or the current expected sales value.

2. Net working capital increases when:

fixed assets are purchased for cash.

inventory is purchased on credit.

inventory is sold at cost.

a credit customer pays for his or her purchase.

inventory is sold at a profit.

3. Net working capital decreases when:

a new 3-year loan is obtained with the proceeds used to purchase inventory.

a credit customer pays his or her bill in full.

depreciation increases.

a long-term debt is used to finance a fixed asset purchase.

a dividend is paid to current shareholders.