QUESTION 1

1. A decrease inventory over the period, will be deducted from net income in determining cash provided or used from operating activities.

   True

   False

2. The statement of financial position is useful for analyzing solvency.

   True

   False

3. If current assets equal $500, and current liabilities equal $100, it can be said that working capital is five-hundred percent or the number five.

   True

   False

4. The current ratio equals current liabilities divided by current assets.

   True

   False

5. Depreciation expense is a non-cash expense that must be added back to net income when preparing a statement of cash flows, following the indirect method.

   True

   False