41.

Which of the following is a key difference between capital expenditures and revenue expenditures?

• None of the answers are correct.
• Capital expenditures include all expenses to acquire an asset and make it ready for its intended use, whereas revenue expenditures represent expenditures for ordinary repairs and maintenance.
• Capital expenditures are charged directly to an expense account in the year they are incurred, whereas revenue expenditures are added to the cost of the asset and depreciated over the course of its life.
• Capital expenditures include costs such as insurance, and oil changes for company vehicles, whereas revenue expenditures include items such as taxes and freight on the item purchased.

42.

You are the owner of a small portrait photography business. You have recently purchased a high-end camera, which you expect to use consistently for entirety of its life expectancy. Which method of depreciation should you use?

• none of the answers are correct
• double declining balance
• units of production
• straight-line depreciation

43.

You have been hired as the accountant for a local coffee shop. The owner would like you to produce a list of her assets, liabilities, and equity in the company. Which of the following financial statements should you prepare?

• a balance sheet
• a statement of retained earnings
• an income statement
• a statement of cash flows

44.

Which of the following ratios measures a business's ability to use assets to generate sales?

• efficiency ratios
• current ratio
• profitability ratio
• financial ratio

45.

What is the most common reason an issuer might retire a bond early at a loss?

• The issuer wants to avoid paying more than the bond is worth.
• There has been a change in interest rates.
• The issuer would like to pursue other investment opportunities.
• Market conditions no longer favor the issuer.