Which of the following procedures is not applied when measuring the amount of the deferred tax asset or liability?

• A.The liability method must be used in measuring the deferred tax asset or deferred tax liability.
• B.The tax consequences of temporary differences must be measured by using enacted future tax rates, and the tax consequences of permanent differences are not recognized.
• C.The deferred tax asset or liability must be measured at its present value.

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The obstacles to collusion include all of the following except:
I). small number of firms
II). low entry barriers
III). unstable market demand
IV). vigorous antitrust prosecution

• A.I only.
• B.II and III.
• C.IV only.

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A and B are efficient portfolios. Then,

• A.A combination of investments in A and B is necessarily an efficient investment.
• B.if A has a higher expected return, it must have a lower risk.
• C.A and B have the same risk-to-reward ratio, OR A and B must have the same risk.

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At December 30, 2000, Vidio Company had 1,000,000 shares of common stock, 200,000 of which had been issued on October 1, 2000. The company declared a 2 for 1 stock split on December 31, 2000.
The weighted number of shares outstanding for calculation of EPS would be

• A.2,000,000 shares.
• B.1,900,000 shares.
• C.1,700,000 shares.

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Clay's Construction Company does work on large construction contracts that take many years to complete. Before they become a public company they are trying to decide which method of recognizing revenue they should use for financial reporting only. If they decide to use percentage of completion rather than completed contract, the effect will be:

• A.higher net income, lower cash flow.
• B.lower net income, higher cash flow.
• C.smoother net income, the same cash flow.

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