Bonds that give the issuer an option 1 point of retiring them before they mature are known as: Debentures Serial bonds. Callable bonds. Registered bonds. Convertible bonds. 1 point The appropriate statement of cash flows activity category for the purchase of land in exchange for common shares is: Operating. Financing Investing Not reported on the statement of cash flows. Schedule of noncash investing or financing activity 1 point If one company owns more than 20% of the shares of another company and the shares are being held as a long- term investment, which method would normally be used to account for this investment? Equity Fair value. Historical cost. Straight-line. Effective. 1 point Chen and Wright are forming a partnership. Chen will invest a building that currently is being used by another business owned by Chen. The building has a fair market value of $35,000. Also, the partnership will assume responsibility for a $15,000 note secured by a mortgage on the building. Wright will invest $10,000 cash. On the books of the partnership, the amount to be recorded for the building and credit to Chen's capital account are: 35,000 and $20,000. $20,000 and $20,000. $20,000 and $10,000. $35,000 and $35,000. $20,000 and $15,000. 1 point You are referred to as an investor when you: Purchase shares of company. Both purchase shares and purchase bonds of a company. Purchase bonds of a company. Issue bonds of a company. Issue shares of a company. The useful life of a property, plant and 1 point equipment asset is: Measured by its potential inadequacy, Another term for its residual value. The length of time it is productively used in a company's operations. Is impossible to estimate. All of these answers are correct. 1 point The Merchandise Inventory for Year 1 was $100,000 and for Year 2 was $94,000. The Accounts Payable account for Year 1 was $40,000 and for Year 2 was $42,000. Cost of goods sold for Year 2 was $360,000. What was the total amount for cash payments for merchandise for Year 2? $356,000 $364,000 $368,000 $352,000 O $84,000 Managers use cash flow predictions 1 point to: Make decisions about acquiring new property, plant and equipment Insource or outsource production of a product Keep or eliminate a product line. Maintain or downsize a department. All of these answers are correct. Changes in accounting estimates are: 1 point Considered accounting errors. Accounted for in the period of the change and future periods. Accounted for with a cumulative "catch-up" adjustment. Considered to be a change in accounting policy. Reported by retrospective restatement of financial statements. 1 point If a corporation that has only one class of shares, or if there is more than one class, the class that has no preference over the other classes of shares, is: Preferred shares. Participating preferred shares. Convertible preferred shares. Cumulative preferred shares. Common shares. The receipt of $6,000,000 in advance 1 point ticket sales would be recorded as: Debit Sales, credit Unearned Revenue. Debit Unearned Revenue, credit Sales. Debit Cash, credit Revenue Payable. Debit Unearned Revenue, credit Cash. O Debit Cash, credit Unearned Revenue. Held-to-maturity investments: 1 point Are always current assets. Are debt securities. Are share investments. Are expected to be converted into cash within one year. Do not generate interest. Significant influence investments: 1 point Are held-for-trading investments. Recognize a proportionate share of an investee's net income as earnings. May be classified as either current or long- term investments Are accounted for using the fair value method. May earn dividends that are reported in the income statement. The method used to account for held- 1 point for-trading investments is the: Equity method Cost method. Effective interest method. Fair value method. All of these answers are correct. 1 point Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value. Music City intends to hold the bonds to maturity. The journal entry to record acquisition of the bonds includes a debit to Held-to- Maturity Investment in Airport Bonds for: $37,800 $40,525 $40,000 $38,325 $41,525 Held-to-maturity Investments. 1 point Are always current assets. Are debt securities. Are share investments. Are expected to be converted into cash within one year. Do not generate interest. Significant influence investments: 1 point Are held-for-trading investments. Recognize a proportionate share of an investee's net income as earnings. May be classified as either current or long- term investments Are accounted for using the fair value method. May earn dividends that are reported in the income statement The method used to account for held- 1 point for-trading investments is the: Equity method Cost method. Effective interest method Fair value method. All of these answers are correct. 1 point Music City paid $37,800 plus a broker's fee of $525 to acquire 8% Airport Corp bonds with a $40,000 maturity value. Music City intends to hold the bonds to maturity. The journal entry to record acquisition of the bonds includes a debit to Held-to- Maturity Investment in Airport Bonds for: $37,800 $40,525 $40,000 $38,325 O $41,525