Hap Owns and Operates a Small Business with Only Four

question 335

Multiple Choice

Hap owns and operates a small business with only four full-time employees and less than $500,000 in annual sales.He currently uses a manual accounting system and relies on a part-time bookkeeper to keep his records in order.In evaluating the possible adoption of a computerized accounting system,Hap will probably discover that:

• A)The expense of setting up a computerized accounting system would not be affordable at this time.
• B)He would be better off hiring a full-time accountant.
• C)He could benefit from adopting such a system,but should also consult with an accountant for advice about what's best.
• D)A computerized system would be affordable,but that he would have little need for it unless his company became significantly larger.

Understand the effects of interest rates on the carrying value of bonds and how this impacts interest expense and net income.

Identify and describe the terms and conditions of bond indentures.

Recognize the accounting treatment for various financial instruments, including derivatives and hedges, under current GAAP.

Understand the effects of interest payments frequency on the proceeds from bond issues and the valuation of bonds.

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Definitions:

Labor Hours

The total number of hours worked by all employees of a company.

Acceptance

In contract law, the offeree's indication to the offeror that the offeree agrees to be bound by the terms of the offeror’s offer or proposal to form a contract.

Offer

A promise or commitment to do or refrain from doing some specified thing in the future.

Breach of Contract

The violation of a contractual obligation or a failure to perform any promised act or obligation.