Multiple choice questions based on fundamentals of accounting.
1. Potential sources of financing to support an increase in sales include all of the following except:
a. decrease in accounts payable.
b. issuance of bonds and/or common stock.
c. current year addition to retained earnings.
d. increase in spontaneous liabilities.
2. A company that increases its liquidity by holding more cash and marketable securities is:
a. likely to achieve a higher return on equity because of higher interest income.
b. going to maximize firm value because risk is decreased.
c. likely to achieve a lower return on equity because of the smaller rates of return earned on cash and marketable securities compared to the firm's other investments.
d. going to have to sell common stock to raise the cash to become more liquid.
3. The beginning and ending finished goods inventories of a company were $91,000 and $94,000 respectively. If cost of goods sold equaled $800,000, what is the amount of cost of goods manufactured for this period?
a. $797,000.
b. $706,000.
c. $709,000.
d. $3,000.
e. $803,000.