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NEW QUESTION: 1
Which of the following would an analyst need to adjust due to the capitalization of interest (assume
U.S. GAAP)?
A. cash flows from operations
B. cash flows from financing
C. current ratio
Answer: A
Explanation:
Cash flows from financing, the current ratio and quick ratio are not affected by the inclusion of interest in the cost of assets. Cash flows from operations would need to be adjusted by a reduction in the amount of the interest capitalized.

NEW QUESTION: 2
When a client has purchased securities on margin, the broker-dealer
A. must keep the securities that the client paid cash for separate from the securities that the client
purchased on margin.
B. may require that the client leave all his securities, even those not purchased on margin, in street name.
C. may use any securities that the client purchased on margin as collateral for a loan from a bank upon
receiving a written agreement signed by the client.
D. Both B and C are correct statements.
Answer: D
Explanation:
A broker-dealer is required to keep any securities a client paid cash for separate from the
securities that the client purchased on margin, and upon receiving a written agreement signed by the
client-a hypothecation agreement-may use those securities that were purchased on margin as collateral
for a loan from a bank. The broker-dealer may not require that a client leave securities purchased through
cash transactions in street name.

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Answer: B,C,D

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