Which One of the Following Statements Is Correct

question 29

Multiple Choice

Which one of the following statements is correct?

• A)Shareholders' equity is the residual value of a firm.
• B)Net working capital must be a positive value.
• C)An increase in cash reduces the liquidity of a firm.
• D)Equipment is generally considered a highly liquid asset.
• E)Depreciation increases total assets.

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Definitions:

Tax Rate Change

An adjustment in the percentage at which an individual or corporation is taxed, affecting the computation of tax liabilities and net income.

Temporary Difference

A difference between the book value and tax value of an asset or liability that will result in taxable or deductible amounts in future years.

Accrued Product Warranty

Liabilities recognized for future costs related to warranty claims on products sold that have not yet been serviced.

Taxable Income

The amount of income that is used to calculate an individual's or a company's income tax dues, calculated as gross income minus deductions and exemptions.