Final Part I Flashcards

1
Q

A corporation is a legal entity separate from its owners.

A

True

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2
Q

The price at which a share of stock is bought or sold is known as par value.

A

False

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3
Q

Common stock always carries a preference for receiving dividends over preferred stock.

A

False

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4
Q

Cumulative preferred stock carries the right to be paid both current and all prior periods’ unpaid dividends before any dividends are paid to common shareholders.

A

True

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5
Q

The date of record is the date that directors vote to pay a cash dividend to shareholders.

A

False

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6
Q

A bond’s par value is not necessarily the same as its market value.

A

True

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7
Q

An installment note is an obligation of the issuing company that requires a series of periodic payments to the lender.

A

True

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8
Q

An annuity is a series of equal payments at equal time intervals.

A

True

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9
Q

The contract rate of interest is the rate that borrowers are willing to pay and lenders are willing to accept for a particular bond and its risk level.

A

False

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10
Q

Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.

A

True

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11
Q

Managerial accounting provides financial and nonfinancial information to an organization’s managers and other internal decision makers.

A

True

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12
Q

Straight line depreciation, rent and manager salaries are examples of variable costs.

A

False

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13
Q

Raw materials inventory should not include indirect materials.

A

False

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14
Q

Unrealized gains and losses on trading securities are reported on the income statement.

A

True

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15
Q

Direct materials are not usually easily traced to a product.

A

False

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16
Q

Long-term investments in debt securities not classified as trading or held-to-maturity securities are classified as available-for-sale securities.

A

True

17
Q

Direct materials are not usually easily traced to a product.

A

False

18
Q

Product costs are capitalized as inventory on the balance sheet and period costs are expenses on the income statement.

A

True

19
Q

The cost of all direct materials issued to production is debited to Work in Process Inventory.

A

True

20
Q

Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.

A

False

21
Q

If actual overhead incurred during a period exceeds applied overhead, the difference will be a credit balance in the Factory Overhead account at the end of the period.

A

False

22
Q

In a process costing system, the purchase of raw materials is credited to the Raw Materials Inventory.

A

False

23
Q

As the level of volume of activity increases, the variable cost per unit remains constant.

A

True

24
Q

A budget can be an effective means of communicating management’s plans to the employees of a business.

A

True

25
Q

Budgets are long term financial plans that generally cover more than a one-year period.

A

False