Question 26

Market values:

(a) reflect expected selling prices given the current economic situation;

(b) are affected by the accounting methods selected;

(c) are equal to the initial cost, minus the depreciation to date;

(d) either remain constant or increase over time; or

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

Question 27 (1.953125 points)

Of the following statements concerning the balance sheet, which choice is most likely correct?

(a) total assets equal total liabilities, minus total equity;

(b) net working capital is equal total assets, minus total liabilities;

(c) assets are listed in descending order of liquidity;

(d) current assets are equal to total assets, minus net working capital n stuff; or

(e) shareholders' equity is equal to net working capital, minus net fixed assets, plus long-term debt.

Question 28 (1.953125 points)

Net income goes up when:

(a) fixed costs increase;

(b) depreciation increases;

(c) the average tax rate increases;

(d) revenue increases; or

(e) dividends cease.

Question 29 (1.953125 points)

In a profitable company, depreciation:

(a) increases net income;

(b) increases net fixed assets;

(c) decreases net working capital;

(d) lowers taxes; or

(e) has no effect on net income.