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1. The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called a:

Preemptive right.

Par value of a stock refers to the:

Value assigned to a share of stock by the corporate charter.

Stockholders' equity consists of :

Contributed capital and retained earnings.

The amount of income earned per share of a company's common stock is known as:

Earnings per share.

A bond traded at 102½ means that:

The bond traded at $1,025 per $1,000 bond.

The payment pattern for an installment note that promises accrued interest plus equal amounts of principal includes:

Decreasing accrued interest

An advantage of bond financing is

Bonds do not affect owners' control.
Interest on bonds is tax deductible.
Bonds can increase return on equity.
It allows firms to trade on the equity.

A discount on bonds payable:

Occurs when a company issues bonds with a contract rate less than the market rate.

The ability to meet short-term obligations and to efficiently generate revenues is called:

Liquidity and efficiency.

Three of the most common tools of financial analysis are:

Horizontal analysis, vertical analysis, ratio analysis.

To compute trend percents the analyst should:

Select a base period, assign each item in the base period statement a weight of 100%, and then express financial numbers from other periods as a percent of their base period number.

The common-size percent is computed by:

Dividing the analysis amount by the base amount and multiplying the result by 100.

Current ratio

Current Assets/Current Liabilties

Acid-test Ratio/Quick Ratio

Cash+Short Term Investments + current receivables/ current liabilities

Debt Ratio

Total Liabilities/Total Assets

Equity Ratio

Total Equity(Share capital (common stock)
Preferred stock
Capital surplus
Retained earnings
Treasury stock
Stock options
Reserve (accounting)) / Total Assets

Managerial accounting is different from financial accounting in that

Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.

Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are:

Direct labor.

Classifying costs by behavior involves

Identifying fixed cost and variable cost.

Products that are in the process of being manufactured but are not yet complete are called:

Goods in process inventory

Equivalent units of production are equal to:

The number of units that could have been completed if all effort had been applied to units that were started and completed that period.

Which of the following characteristics applies to process cost accounting and not to job order cost accounting?

Equivalent units of production

After posting all actual factory overhead and applying factory overhead to production departments in a process costing system,

There may be over or underapplied overhead.

To compute an equivalent unit of production, one must be able to reasonably estimate:

The percentage of completion.

A department that incurs costs without directly generating revenues is a:

Production center.

Costs that the manager has the power to determine or at least strongly influence are called:

Controllable costs.

The most useful evaluation of a manager's cost performance is based on:

Controllable costs.

In a firm that manufactures clothing, the department that is responsible for actually assembling the garments could best be described as a:

Operating or production department

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