1) A net loss is shown on the work sheet in the credit columns of both the Income
Statement columns and the Balance Sheet columns.
2) Managers use managerial information to evaluate performance of a companys
operation.
3) Manufacturers must conform to the Robinson-Patman Act which prohibits price
discrimination within the United States unless differences in prices can be justified by
different costs of serving different customers.
4) Cost plus methods determine the normal selling price by estimating a cost amount
per unit and adding a markup.
5) The par value of stock is an arbitrary per share amount defined in many states as
legal capital.
6) To determine the six month interest payment amount on a bond, you would take
one-half of the market rate times the face value of the bond.
7) Ordinary gains from the sale of fixed assets should be reported in the other income
section of the income statement.
8) While setting standards, the managers should never allow for spoilage or machine
breakdowns in their calculations.
9) When the market rate of interest is less than the contract rate for a bond, the bond
will sell for a premium.
10) The Sarbanes-Oxley Act requires that financial statements of all public companies
report on management’s conclusions about the effectiveness of the company’s internal
control procedures.
11) Employees view budgeting more positively when goals are established for them by
senior management.
12) Direct disposal costs do not include special advertising or sales commissions.