11. Which one of the following is included in net workingcapital? A. Land B. Accounts payable C. Equipment D. DepreciationE. Dividend 

12. Over the past year, a firm decreased its currentassets and increased its current liabilities. As a result, thefirm's net working capital: A. had to increase. B. had to decrease.C. could have remained constant if the amount of the decrease incurrent assets equaled the amount of the increase in currentliabilities. D. could have either increased, decreased, or remainedconstant. E. was unaffected as the changes occurred in the firm'scurrent accounts. 

13. Which one of the following statements iscorrect? A. Shareholders' equity is the residual value of a firm.B. Net working capital must be a positive value. C. An increase incash reduces the liquidity of a firm. D. Equipment is generallyconsidered a highly liquid asset. E. Depreciation increases totalassets. 

14. All else equal, an increase in which one of thefollowing will decrease owners' equity? A. Increase in inventory B.Increase in accounts payable C. Increase in accounts receivable D.Increase in net working capital E. Increase in net fixed assets 

15.Highly liquid assets: A. increase the probability a firm will facefinancial distress. B. appear on the right side of a balance sheet.C. generally produce a high rate of return. D. can be sold quicklyat close to full value. E. include all intangible assets. 

16.Financial leverage: A. increases as the net working capitalincreases. B. is equal to the market value of a firm divided by thefirm's book value. C. is inversely related to the level of debt. D.is the ratio of a firm's revenues to its fixed expenses. E.increases the potential return to the shareholders. 

17. Which oneof the following statements concerning market and book values iscorrect? A. The market value of accounts receivable is generallyhigher than the book value of those receivables. B. The marketvalue tends to provide a better guide to the actual worth of anasset than does the book value. C. The market value of fixed assetswill always exceed the book value of those assets. D. Book valuesrepresent the amount of cash that will be received if an asset issold. E. The current book value of equipment purchased last year isequal to the initial cost of the equipment. 

18. The market value ofa firm's fixed assets: A. must exceed the book value of thoseassets. B. is more predictable than the book value of those assets.C. in addition to the firm's net working capital reflects the truevalue of a firm. D. is decreased annually by the depreciationexpense. E. is equal to the estimated current cash value of thoseassets. 

19. Which one of the following statements is correctconcerning a firm's fixed assets? A. The market value is theexpected selling price in today's economy. B. The market value isaffected by the accounting method selected. C. The market value isequal to the initial cost minus the depreciation to date. D. Thebook value is equal to the market value minus the accumulateddepreciation. E. The book value is the greater of the initial costor the current market value. 

20. An increase in which one of thefollowing will increase net income? A. Fixed costs B. DepreciationC. Marginal tax rate D. Revenue E. Dividends