Use the Following Two Probability Distributions for Sales of a Firm

question 33

Multiple Choice

Use the following two probability distributions for sales of a firm to answer the following question: $$\begin{array} { c c c } \text { Sales } & \begin{array} { c } \text { Disilibisiont } \\\text { Probabildy }\end{array} & \begin{array} { c } \text { Dilribulion2 } \\\text { Probabilly }\end{array} \\\hline 2,000 & 0.05 & 0.05 \\3,000 & 0.20 & 0.15 \\4,000 & 0.50 & 0.20 \\5,000 & 0.20 & 0.35 \\6,000 & 0.05 & 0.25\end{array}$$ The expect value of sales for Distribution 2 is _____________.

• A)2,500
• B)2,758
• C)2,800
• D)3,000
• E)none of the above

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Definitions:

Operating Activities

These involve the primary, day-to-day actions that generate revenue and incur expenses in the normal course of business, reflected in the cash flows from operations section of the statement of cash flows.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the business’s operating cycle, whichever is longer, such as cash, inventory, and receivables.

Direct Method

In cash flow reporting, a format that presents major classes of gross cash receipts and payments, providing transparency into a company's operating cash flows.

Operating Activities

Activities that constitute the primary or main activities of a business, such as selling goods or providing services.