1.(TCO 6) Which of the following is a natural resource?(Points : 3) Patents
Timber
Gas reserves
both B and C
| Question 2. 2.(TCO 6) The process of depreciating an asset over its useful life is an application of the _____ principle.(Points : 3) |
full disclosure
revenue recognition
historical cost
matching |
| Question 3. 3.(TCO 6) All of the following are classified as natural resources and are depleted except for(Points : 3) |
land.
timber.
minerals.
oil. |
| Question 4. 4.(TCO 6) When an investor owns between 20% and 50% of the outstanding stock of another company, the _____ method is used to account for stock investments.(Points : 3) |
market value
equity
consolidated
historical cost. |
| Question 5. 5.(TCO 6) The future value of 1 will always be(Points : 3) |
equal to 1.
greater than 1.
less than 1.
equal to the interest rate. |
| Question 6. 6.(TCO 6) A current liability is a debt that can reasonably be expected to be paid(Points : 3) |
within 1 year or the company’s normal operating cycle (if it is longer than 1 year).
between 6 months and 18 months.
out of cash on hand.
out of current revenues. |
| Question 7. 7.(TCO 6) Failure to record an accrued liability causes a company to(Points : 3) |
overstate income.
overstate assets.
understate liabilities.
understate owners’ equity. |
| Question 8. 8.(TCO 6) If bonds are issued at a discount, it means that the(Points : 3) |
market interest rate is higher than the stated interest rate.
market interest rate is lower than the stated interest rate.
financial strength of the issuer is weak.
bond is convertible. |
| Question 9. 9.(TCO 6) Bonds that mature at a single specified future date are called(Points : 3) |
term bonds.
coupon bonds.
serial bonds.
debentures. |
|
Question 10.10.(TCO 6) A disadvantage of using bonds as a method of long-term financing is that(Points : 3)
|
interest must be paid regardless of earnings.
interest expense is tax deductible.
bond holders do not have voting rights.
issuing bonds results in higher earnings per share. |
