1. Which one of the following is correct in relation to pro forma statements?
A. Fixed assets must increase if sales are projected to increase.
B. Net working capital is affected only when a firm's sales are expected to exceed the firm's current production capacity.
C. The addition to retained earnings is equal to net income plus dividends paid.
D. Inventory changes are directly proportional to sales changes.
2. When the demand for bonds ________ or the supply of bonds ________, bond prices fall.
a. increases; increases
b. increases; decreases
c. decreases; decreases
d. decreases; increases