Question

1. All of the following items are found on a company's income statement EXCEPT: A Depreciation...

1. All of the following items are found on a company's income statement EXCEPT:

A Depreciation Expense

B Current Liabilities

C Cost of Goods Sold

D Bond Interest Expense

2. A convertible bondholder converts. Which of the following is reduced?

A Current Assets

B Total Liabilities

C Net Worth

D Retained Earnings

3. Over a period of 18 months, prices of goods and services increase by 4%, and market interest rates increase by 5%. This signals that the economy is in a period of:

A depression

B prosperity

C inflation

D recession

4. Decreasing inventory levels are an indication of all of the following EXCEPT:

A consumer demand is increasing

B economic expansion is occurring

C consumer demand is high

D economic conditions are deteriorating

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Homework Answers

Answer #1

Q1: Current Liabilities is to be reported in Balance Sheet and not in Income Statement. All others belong to Income Statement. Hence the answer is option B Current Liabilities.

Q2: When a convertible bond holder converts, liabilities get reduced and net worth increases. Hence the answer is Option B Total Liabilities.

Q3: Increase in prices of goods and services and market interest rates is an indication of inflation. The answer is option C

Q4: Decreasing inventory levels indicate increase in demand and economic expansion. The only exception, in the given set is ‘economic conditions are deteriorating’. Hence the answer is option D

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