Question1: Cost of goods sold is an:
[A] Revenue
[B]Expense
[C] Asset
[D] Liability
Question2: An expense is recognized when:
[A] A business pays rent
[B] A business repays a loan
[C] A business buys inventory
[D] A business buys supplies
Question3: Accounts payable increases when:
[A] Customers pay for goods previously purchased on credit
[B] A payment is made for goods purchased on credit
[C] Goods are sold on credit
[D] Goods are purchased on credit
Question4: Which of the following is an example of a fixed asset?
[A] Inventory
[B] Cash
[C] Building
[D] Supplies
Question5: Walker Corporation is planning to issue new 20-year bonds. Initially, the plan was to make the bond non-callable. If the bond were made callable after 5 years with a 5% call premium, how would this affect the bond’s required rate of return?
[A] There is no reason to expect a change in the required rate of return.
[B] The required rate of return would decline because the bond would then be less risky to a bondholder.
[C] The required rate of return would increase because the bond would then be more risky to a bondholder.
[D] It is impossible to say without more information.
[E] Because of the call premium, the required rate of return would decline.