Question

1.

Which of the following is not an advantage for a company that sells bonds?

		Legal obligation to pay interest
		Temporary source of funds
		Interest is tax-deductible
		Can be repaid before maturity with call provision

2.

Which of the following is not a role of a managerial accountant?

		Preparing budgets
		Preparing information and analyses for people outside of the organization
		Measuring and reporting costs of production, marketing, and other functions
		Designing strategies to minimize taxes

3.

Which of the following is not an example of a short-term fund?

		Unanticipated emergencies
		New product development
		Expanding current inventory
		Meeting monthly expenses

4.

Which type of user would be interested in the financial statements (e.g., income statement, balance sheet, statement of cash flows) found in annual reports?

		Government taxing authorities (e.g., the Internal Revenue Service)
		Managers of the firm
		People interested in the organization's income and financial position (e.g., owners, creditors, financial analysts, suppliers)
		Government regulatory agencies

Answer 1

Q - 1

The correct answer is: Legal obligation to pay interest

This is not an advantage of borrowing, this is an obligation. Rest all are benefits due to borrowing.

Q - 2

The correct answer is: Preparing information and analyses for people outside of the organization

The primary role of the management accountant is to prepare information and analyses for people inside the organization. Other roles mentioned in other options are also the roles.

Q - 3

The correct answer is: New product development

All other options require short term funding. New product development can stretch for a longer time and hence requires long term fund.

Q - 4

The correct answer is: People interested in the organization's income and financial position (e.g., owners, creditors, financial analysts, suppliers)