Question: 1. Short-term notes payable:
- Cannot replace an account payable.
- Can be issued in return for money borrowed from a bank.
- Are not negotiable.
- Are a conditional promise to pay.
- Rarely involve interest charges.
2. Advantages of a partnership include:
- Limited life.
- Mutual agency.
- Unlimited liability.
- Co-ownership of property.
- Voluntary association.
3. Rights to purchase common stock at a fixed price over a specified period are:
- Preferred stocks.
- Class B stocks.
- Stock options.
- Stock restrictions.
- Preemptive rights.
4. If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?
- Equity method.
- Fair value method.
- Historical cost method.
- Cost with amortization method.
- Effective method.
5. Held-to-maturity securities are:
- Always classified as Short-Term Investments.
- Always classified as Long-Term Investments.
- Debt securities that a company intends and is able to hold to maturity.
- Equity securities that a company intends and is able to hold to maturity.
- Equity securities where significant influence involved.
6. Investments in trading securities:
- Include only equity securities.
- Are reported as current assets.
- Include only debt securities.
- Are reported at their cost, no matter what their market value.
- Are long-term investments.