Yvonne Yang, VP of Finance at Discrete Components, Inc

question 8

Multiple Choice

Yvonne Yang, VP of Finance at Discrete Components, Inc.(DCI) , wants a regression model which predicts the average collection period on credit sales.Her data set includes two qualitative variables: sales discount rates (0%, 2%, 4%, and 6%) , and total assets of credit customers (small, medium, and large) .The number of dummy variables needed for "sales discount rate" in Yvonne's regression model is ________.

• A)1
• B)2
• C)3
• D)4
• E)7

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Definitions:

Direct Method

A cash flow statement preparation approach that lists major payments and receipts of cash from operational activities directly.

Indirect Method

An approach used in cash flow statements where net income is adjusted for non-cash transactions, deferred revenues, and expenses to calculate cash flow from operating activities.

Indirect Approach

A method used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Noncash Charges

Expenses reported on an income statement that do not involve actual cash flow, such as depreciation, amortization, and stock-based compensation.