Final Part I Flashcards
A corporation is a legal entity separate from its owners.
True
The price at which a share of stock is bought or sold is known as par value.
False
Common stock always carries a preference for receiving dividends over preferred stock.
False
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.
True
The date of record is the date that directors vote to pay a cash dividend to shareholders.
False
A bond’s par value is not necessarily the same as its market value.
True
An installment note is an obligation of the issuing company that requires a series of periodic payments to the lender.
True
An annuity is a series of equal payments at equal time intervals.
True
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.
False
Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation.
True
Managerial accounting provides financial and nonfinancial information to an organization’s managers and other internal decision makers.
True
Straight line depreciation, rent and manager salaries are examples of variable costs.
False
Raw materials inventory should not include indirect materials.
False
Unrealized gains and losses on trading securities are reported on the income statement.
True
Direct materials are not usually easily traced to a product.
False
Long-term investments in debt securities not classified as trading or held-to-maturity securities are classified as available-for-sale securities.
True
Direct materials are not usually easily traced to a product.
False
Product costs are capitalized as inventory on the balance sheet and period costs are expenses on the income statement.
True
The cost of all direct materials issued to production is debited to Work in Process Inventory.
True
Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.
False
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.
False
In a process costing system, the purchase of raw materials is credited to the Raw Materials Inventory.
False
As the level of volume of activity increases, the variable cost per unit remains constant.
True
A budget can be an effective means of communicating management’s plans to the employees of a business.
True
Budgets are long term financial plans that generally cover more than a one-year period.
False
