Briefly define cognitive ability.
What will be an ideal response?
Cognitive ability refers to a very general mental capability that, among other things, involves the ability to reason, plan, solve problems, think abstractly, comprehend complex ideas, learn quickly, and learn from experience. Cognitive ability is synonymous with the general notion of intelligence.
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The weighted average method is taught by some accountants to be inferior to the FIFO method because it
a. Ignores work performed in subsequent periods. b. Commingles costs of two periods. c. Is more difficult to apply. d. Only considers the last units worked on.
Using the Direct Method For the following question(s), indicate how each transaction described would be classified on a statement of cash flows if the operating activities section is prepared under the direct method. When using the direct method, where is the payment of a cash dividend shown on the statement of cash flows?
A) Operating activity B) Investing activity C) Financing activity D) Noncash investing and financing activity
Which of the following statements is CORRECT?
A. When calculating the cost of preferred stock, companies must adjust for taxes, because dividends paid on preferred stock are deductible by the paying corporation. B. Because of tax effects, an increase in the risk-free rate will have a greater effect on the after-tax cost of debt than on the cost of common stock as measured by the CAPM. C. If a company's beta increases, this will increase the cost of equity used to calculate the WACC, but only if the company does not have enough reinvested earnings to take care of its equity financing and hence must issue new stock. D. Higher flotation costs reduce investors' expected returns, and that leads to a reduction in a company's WACC. E. When calculating the cost of debt, a company needs to adjust for taxes, because interest payments are deductible by the paying corporation.
A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a(n) ________
A) common stock B) corporate bond C) indenture D) preferred stock