1)

Depreciation for a profitable firm

A: decreases both operating and net income.

B: increases the net fixed assets as shown on the balance sheet.

C: reduces both the net fixed assets and the costs of a firm.

D: is a non-cash expense which increases the net operating income.

E: decreases net fixed assets, net income, and operating cash flows.

2) For a growing firm, the change in net working capital is generally:

A: positive.

B: negative.

C: highly erratic.

D: highly negative.

E: equal to zero.

3)The accounting statement of cash flows consists of the cash flows from:

A: operations, investing activities, and financing activities.

B: operations, investing activities, and divesting activities.

C: internal activities, external activities, and financing activities.

D: balance sheet accounts only.

E: income statement accounts only.

4) Total equity is $1,620, fixed assets are $1,810, long-term debt is $650, and short-term debt is $300. What is the amount of current assets?

A: $760

B: $360

C: $1,140

D: $480

E: $790

5) Brewster Mills has total revenues of $684,350, costs of goods sold of $472,500, net income of $11,520, and average inventory of $91,600. What is the days' sales in inventory?

A: 69.84 days

B: 70.76 days

C: 71.51 days

D: 5.16 days

E: 4.08 days

6) Using the internal rate of return method, a conventional investment project should be accepted if the internal rate of return is:

A: equal to, and only if it is equal to, the discount rate.

B: equal to or greater than the discount rate.

C: less than the discount rate.

D: negative.

E: positive.