QUESTION 1

1. Bonds that are purchased with the intent of selling them in the near future to take advantage of short-term price changes are classified as:

   	a.	Securities available-for-sale.
   	b.	Consolidating securities.
   	c.	Held-to-maturity securities.
   	d.	Trading securities.

3 points

QUESTION 2

1. Amortization of capitalized computer software costs is:

   	a.	The greater of the percentage-of-revenue method or the straight-line method.
   	b.	The lesser of the percentage-of-revenue method or the straight-line method.
   	c.	Either the percentage-of-revenue method or the straight-line method at the company's option.
   	d.	Based on neither the percentage-of-revenue nor the straight-line method.

3 points

QUESTION 3

1. When selling property, plant, and equipment for cash:

   	a.	The seller recognizes a gain or loss for the difference between the cash received and the fair value of the asset sold.
   	b.	The seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold.
   	c.	The seller recognizes losses, but not gains.
   	d.	None of these answer choices are correct.

3 points

QUESTION 4

1. A company spends $50,000 this year in research and development for a new drug to cure liver damage. By the end of the year, management feels confident that the new drug will gain FDA approval and lead to higher future sales. What impact will the $50,000 spending have on this year's financial statements?

   	a.	Increase assets.
   	b.	Increase expenses.
   	c.	Decrease revenues.
   	d.	Increase revenues.

3 points

QUESTION 5

1. A higher fixed-asset turnover ratio indicates management is more effective in managing its company's property, plant, and equipment.

   True

   False