1. Research indicates that all of the following statements are correct, except:

A. Stock price movements are more closely related to income statement information than cash flow information

B. Useful (but not perfect) models exist that use financial statement data to predict company bankruptcy.

C. Useful (but not perfect) models exist that use financial statement data to detect improper reporting of financial information.

D. Stock price movements are greater when a change in income is due to one-time items than when the change in income is due to persistent items.

2. Reasons that a private company might decide to prepare financial statements include all of the following, except:

1. The companys lenders require the company to send them financial statements

B. The company has several owners, who wish to monitor their ownership interests.

C. All U.S. companies must file annual audited financial statements with the U.S. government each year.

D. The company has profit-sharing plans that require it to base payments on financial statement information.

3. Every car that Volkswagen sells has four wheels. The relation between the number of wheels that Volkswagen must buy and the number of cars it sells is an example of the concept of:

A. Interchangeability

B. Capacity

C. Responsiveness

D. Interdependence

4. The term exit price means

A. The price at which an asset can be sold in orderly markets

B. The amount the company would receive by selling the asset in orderly markets, less transaction costs

C. The sales value assuming the company must sell immediately

D. The price at which someone can buy the asset now.

5. The IMAs term for the correlation between a particular managerial objectives output quantity and the input quantities required to produce that output is:

A. Divisibility

B. Traceability

C. Homogeneity

D. Responsiveness