Please indicate if the following statements are true false or not always true

1. The current GAAP is more based on the transaction approach, which is more focused on the accounts on the income statement
2. Pro forma earnings should be created based on GAAP
3. The Graham, Campbell, and Rajgopal article shows that the earnings guidance can increase agency cost by discouraging managers from focusing on long-term value increase
4. Current cash flow is a better proxy for future cash flows than current earnings
5. Cost of equity is a minimum rate of return that investors require in the market

6. PE ratio is 40. What is the cost of equity using the PE ratio?

1. 2.5%
2. 3%
3. 3.5%
4. 2%

7. The following table shows the financial information of Wal-Mart Stores

Period ending 1/31/2017 1/31/2016 1/31/2015

Net income 13,643,000 14,694,000 16,363,000

Total cash from 31,530,000 27,389,000 28,564,000

Operating activities

Total cash from -13,987,000 -10,675,000 -11,125,000

Investing activities

Total cash flows -18,929,000 -16,122,000 -15,071,000

From financing activities

Calculate the total amount of accruals for 2017 and indicate if it is a positive (increases earnings) or negative (decreases earnings) one.