1. Which of the following is NOT a true statement about bonds?

A. A company that issues bonds is (typically) borrowing momey from the piblic not a specific person or institution

B. A bonds prices in the secondary market changes as the market interest changes over time.

C. Bonds can be turned in by their holders prior to their maturity date and receive the bonds face value

D. When a company issues convertible bonds it will not have to pay the face value of the bonds are converted before the bonds maturity date

2. A manufacturing company using full-absorption costing can increase net income by which of the following.

A. Increasing production and increasing ending inventory at the end of the year

B. Decreasing the inventory

C. Writing ending inventory down to its fair value

D. All of the above

3. At December 31, 2010, Edgar Enterprises had equipment with a book value of $40,000. On December 31, 2009, the book value was $55,000. The original cost of the equipment was $75,000. Assuming straight-line depreciation and no salvage value, what is the estimated economic life of the asset?

A. 5 years

B. 4 years

C. 3 years

D. 2 years