Question

Ch. 1 1. Financial assets: a. are legal documents b. give their owners claims to past cash flows c. include stocks and bonds d. Both a & c e. All of the above 2. The principal legal difference between a stockholder and a bondholder is a. the stockholder receives interest and the bondholder receives dividends b. only the bondholder can attend annual meetings c. the bondholder has an ownership interest and the shareholder is a lender d. the shareholder has an ownership interest and the bondholder is a lender 3. Raising money and handling financial relationships with outsiders is a function of the a. controller. b. treasury department c. accounting department d. All of the above 4. The primary advantage of the proprietor form of business over the corporate form is: a. ease of raising capital (money.) b. avoidance of double taxation c. unlimited life d. limited liability Ch. 2 5. Depreciation, from an accounting viewpoint, can best be thought of as a. accounting for the phvsical deterioration of an asset b. writing off assets like patents, trademarks, and copyrights c. matching the carrying value of the asset with the estimated net realizable value of the asset d. allocating the cost of the asset to the periods in which it gives service.

Answer 1

Solution 1 :- The correct answer is (D) that is Both a & c

Solution 2 :- The correct answer is (D) that is Shareholder has an ownership interest and the bond holder is a lender

Solution 3 :- The correct answer is (B) that is Treasury Department

Solution 4 :- The correct answer is (B) that is Avoidance of double taxation

Solution 5 :- The correct answer is (D) that is allocating the cost of the depreciable asset to the periods in which it gives service