A company purchased inventory on credit. What effect did this have on the company?

	a.	Working capital increased.
	b.	Earnings per share increased.
	c.	Earnings per share decreased.
	d.	Debt-to-equity ratio increased.

2.

SPI-K Financial uses straight-line depreciation for its equipment with an estimated useful life of 10 years and zero residual value. The CEO points out that the equipment will last fewer than 10 years, perhaps only 5 years. If equipment is depreciated over 5 years rather than 10 years, what is the impact on earnings per share and net income of depreciating equipment?

	a.	Both earnings per share and net income will increase.
	b.	Both earnings per share and net income will decrease
	c.	Earnings per share will decrease; net income will increase.
	d.	Earnings per share will increase; net income will decrease.