Santa Fe Company Was Started on January 1, Year 1

question 3

Multiple Choice

Santa Fe Company was started on January 1, Year 1, when it acquired $9,000 cash by issuing common stock. During Year 1, the company earned cash revenues of $4,500, paid cash expenses of $3,750, and paid a cash dividend of $250. Based on this information,

• A) The balance sheet at December 31, Year 1 would show total equity of $8,750.
• B) The Year 1 income statement would show net income of $500.
• C) The Year 1 statement of cash flows would show net cash inflow from operating activities of $4,500.
• D) The Year 1 statement of cash flows would show a net cash flow from financing activities of $8,750.

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Definitions:

First-Order Autocorrelation

A statistical measure that tests the extent to which current values in a time series are correlated with their immediate preceding value, indicating a lag-1 autocorrelation.

Durbin-Watson Statistic

A quantitative method utilized for detecting autocorrelation in the residuals resulting from regression analysis.

Critical Values

Specific points on the scale of a test statistic beyond which we reject the null hypothesis in hypothesis testing.

Autocorrelation

The correlation of a signal with a delayed copy of itself, often used to analyze functions or series of values, like time series data.