Which of the Following Items Would Be Charged to the Cost

question 44

Multiple Choice

Which of the following items would be charged to the cost of land rather than the cost of the building?

• A) Architectural fees.
• B) Cost of foundation.
• C) Capitalization of interest financing charges.
• D) Demolition of existing structure.

Calculate and understand the implications of the current ratio and acid-test ratio for business liquidity.

Understand the calculation and business implications of the acid-test ratio.

Calculate the acid-test ratio based on given financial information.

Understand the function and calculation of the gross margin ratio.

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Definitions:

Minimum Legal Capital

The least amount of capital that a company is required to maintain by law, to protect creditors from the company's liabilities.

Convertible Stock

Equity securities that can be converted into a predetermined number of common shares, at the option of the holder.

Callable Stock

A type of security that gives the issuer the right to buy back the shares at a predetermined price after a certain period.

Noncumulative Stock

Preferred stock where dividend payments are not accumulated if they are not declared, meaning shareholders may lose the right to dividends in missed payment periods.