Midterm Exam Part 1 Solutions

1799 Words Jan 24th, 2015 8 Pages
00Test Week 5 Midterm Exam Part 1
Started 11/12/14 12:52 PM
Submitted 11/12/14 3:39 PM
Status Needs Grading
Attempt Score 40 out of 50 points
Time Elapsed 2 hours, 46 minutes out of 2 hours.
Instructions
This exam consist of 25 multiple choice questions and covers the material in Chapters 1 through 3. Question 1 .2 out of 2 points Correct You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of:
Answer
Selected Answer: A secondary market transaction.
Correct Answer: A secondary market transaction. . Question 2 .2 out of 2 points Correct Which of the following statements is CORRECT?
Answer
Selected
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However, for valuation purposes we need to discount cash flows, not accounting income. Moreover, since many firms have a number of separate divisions, and since division managers should be compensated on their divisions' performance, not that of the entire firm, information that focuses on the divisions is needed. These factors have led to the development of information that is focused on cash flows and the operations of individual units.
Correct Answer: The standard statements focus on accounting income for the entire corporation, not cash flows, and the two can be quite different during any given accounting period. However, for valuation purposes we need to discount cash flows, not accounting income. Moreover, since many firms have a number of separate divisions, and since division managers should be compensated on their divisions' performance, not that of the entire firm, information that focuses on the divisions is needed. These factors have led to the development of information that is focused on cash flows and the operations of individual units. . Question 11 .2 out of 2 points Correct Which of the following statements is CORRECT?
Answer
Selected Answer: In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.
Correct Answer: In the statement of cash flows, a decrease in

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