Which of the following statements is NOT CORRECT?
A. Accruals are "free" in the sense that no explicit interest is paid on these funds.
B. A conservative approach to working capital management will result in most, if not all, permanent current operating assets being financed with long-term capital.
C. The risk to a firm that borrows with short-term credit is usually greater than if it borrowed using long-term debt. This added risk stems from the greater variability of interest costs on short-term debt and possible difficulties with rolling over short-term debt.
D. Bank loans generally carry a higher interest rate than commercial paper.
E. Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.
Answer: E
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Which of the following statements is TRUE of costing systems?
A) Many traditional costing systems can distort product costs and profitability. B) Traditional costing systems tend to be more costly than activity-based costing systems. C) Activity-based costing systems tend to combine various costs into a single cost pool. D) Activity-based costing systems tend to use fewer cost pools than does a traditional costing system.
An unfunded pension liability is reported on the balance sheet as
A) current liability B) owner's equity C) long-term liability D) current liability or long-term liability, depending upon when the pension liability is to be paid
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Indicate whether the statement is true or false
Please identify the letter of the choice that best matches the numbered situations below.
A. You need to document company procedures B. You are analyzing whether to purchase new computer equipment or upgrade the current equipment C. You are recommending a new way to schedule staff resources D. You are offering your company's services to a person or organization E. You are proposing to purchase new computer equipment