1) Why do managers of a company need information about its product costs?
2) How are direct costs different from indirect costs?
3) Smith Corporation purchased land and a building for $300,000. The appraised value
of the land is $150,000 and the appraised value of the building is $250,000. What
amount of the purchase price will be allocated to the land and what amount will be
allocated to the building?
4) State the reason that goodwill is not amortized as some other intangible assets are.
5) What type of account is Salaries Payable?
6) Indicate whether each of the following statements about lines of credit is true or
false.
1>The signing of a line of credit agreement is an asset source transaction
2>Line of credit agreements generally involve a fluctuating rate of interest
3>Interest rates may vary with the rates of US Treasury Bills
4>Line of credit agreements generally have a five-year term
5>Lines of credit frequently are extended at the end of their term by renewing the
agreement
7) Indicate whether each of the following statements about the types of transactions is
true or false.
1>An asset source transaction results in an increase in total assets and a decrease in
claims
2>The issuance of stock to owners for cash is an asset exchange transaction
3>Loaning money to another company is an asset exchange transaction
4>Paying a dividend to stockholders is an asset use transaction
5>Purchasing equipment for cash is an asset exchange transaction