Reference no: EM131752096

Question: 1. Short-term notes payable:

- Cannot replace an account payable.

- Can be issued in return for money borrowed from a bank.

- Are not negotiable.

- Are a conditional promise to pay.

- Rarely involve interest charges.

2. Advantages of a partnership include:

- Limited life.

- Mutual agency.

- Unlimited liability.

- Co-ownership of property.

- Voluntary association.

3. Rights to purchase common stock at a fixed price over a specified period are:

- Preferred stocks.

- Class B stocks.

- Stock options.

- Stock restrictions.

- Preemptive rights.

4. If a company owns more than 20% of the stock of another company and the stock is being held as a long-term investment, which method would the investor normally use to account for this investment?

- Equity method.

- Fair value method.

- Historical cost method.

- Cost with amortization method.

- Effective method.

5. Held-to-maturity securities are:

- Always classified as Short-Term Investments.

- Always classified as Long-Term Investments.

- Debt securities that a company intends and is able to hold to maturity.

- Equity securities that a company intends and is able to hold to maturity.

- Equity securities where significant influence involved.

6. Investments in trading securities:

- Include only equity securities.

- Are reported as current assets.

- Include only debt securities.

- Are reported at their cost, no matter what their market value.

- Are long-term investments.