Question

1.Examples of period costs, also referred to as fixed costs, are:

A.depreciation expenses, SG&A and current liabilities

B.depreciation expenses, R & D expenses, and labor expenses

C.depreciation expenses, R&D expenses, and variable costs

D.depreciation expenses, R & D expenses, and administrative expenses

E.short term expenses, SG&A, and R&D expenses

2.Anything of value owned or leased by a business (such as cash, accounts receivable and buildings) is considered to be:

A.a liability

B.a bond

C.a fixed asset

D.an asset

E.a current asset

3.An account payable is the same as:

A.a bond

B.an account receivable

C.an asset

D.a long term debt

E.a current liability

4.If a firm's liabilities are $90,000 and its assets are $150,000 what is the owners' equity?

A.$60,000

B.$90,000

C.$150,000

D.$240,000

E.Unable to determine from the information provided

5.What are examples of current assets?

A.Cash, accounts payable, inventory

B.Cash, buildings, and accounts receivables

C.Accounts payables, cash and inventory

D.Cash, accounts receivable and inventory

E.Credit, accounts receivable and inventory

6.The difference between contribution margin and gross margin is:

A.gross marketing excludes depreciation expenses

B.gross margin includes depreciation expenses

C.contribution includes depreciation expenses

D.contribution margin includes variable costs

E.contribution margin and gross margin are identical

Answer 1

1 (D)

Fixed costs are the costs which remain fixed and are to be paid by the company. The depreciation, administrative and R & D expenses are the fixed costs for the company.

2 (D)

Asset is considered as the item owned by the business which has a value.

3 (E)

The accounts payable is the amount which is payable in short span of time and considered as a current liability.

4 (A)

Assets are the total of liabilities and owner's equity. Owners equity = $150000- $90000= $60000

5 (D)

The current assets are the assets which can be easily converted to cash and include cash, accounts receivable and inventory.

6 (B)

The difference between contribution margin and gross margin is gross margin includes depreciation expenses.