Use the Following Information for Questions 63-64 $\bullet$ Sales of $4,500 on Account

question 90

Multiple Choice

Use the following information for questions 63-64.
Lamb Company had the following transactions during 2010.
$\bullet$ Sales of $4,500 on account
$\bullet$ Collected $2,000 for services to be performed in 2011
$\bullet$ Paid $625 cash in salaries
$\bullet$ Purchased airline tickets for $250 in December for a trip to take place in 2011

-What is Lamb's 2010 net income using cash basis accounting?

• A) $5,875
• B) $1,375
• C) $5,625
• D) $1,125

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Definitions:

Beta

An evaluation of the unsteadiness, or systematic jeopardy, of a security or collective financial investments when compared to the market as a whole.

CAPM

The Capital Asset Pricing Model, a formula used to determine the theoretical expected return of an investment given its risk relative to the market.

Risk-free Asset

An investment with zero risk of financial loss, typically considered to be government bonds.

Systematic Risk

Systematic risk refers to the risk inherent to the entire market or market segment, which cannot be mitigated through diversification.