1. Return on equity:

Select one: a. none of the above is correct b. Does not depend on how the firm is financed c. Is sensitive to the capital structure d. Is higher for younger firms

2.

Suppose that company ABC accounted for inventory using LIFO but is considering switching to FIFO. What are the effects of this change on the cash flow statement?

Select one:

a. not enough information to answer

b. cash flow will be higher if the price of inputs is decreasing

c. no effect

d. cash flow will be higher if the price of inputs is increasing

3.

Consider the following adjusted trial balance:

	Dr ()	Cr ()
share capital		20000
cash	11000
trade receivables	14000
buildings at cost	65000
accumulated depreciation on buildings		40000
sales returns	2000
inventory	9000
retained profits		32500
discounts received		1500
doubtful debt provision		700
cogs	28000
sales		60000
electricity	4900
machinery at cost	30000
accumulated depreciation on machinery		17400
depreciation expense	7400
electricity accrual		400
bad debt expenses	1000
change in doubtful debts provision	200

Total assets in the balance sheet at the end of the year are:

Select one:

a. 70900

b. 68700

c. 71600

d. 72400