Depending on Its Constitution and the Terms of the Prospectus

question 37

Multiple Choice

Depending on its constitution and the terms of the prospectus, a company that receives more than the required number of applications for its shares will normally:

• A) issue the additional shares.
• B) retain the excess in satisfaction of future calls.
• C) refund the excess to unsuccessful applicants.
• D) refund the excess to unsuccessful applicants or retain the excess in satisfaction of future calls.

Recognize assumptions underlying cost-volume-profit analysis and the limitations of these assumptions.

Understand the basic principles of cost-volume-profit (CVP) analysis and its limitations.

Calculate and interpret the break-even point in units and dollars.

Apply sensitivity analysis to assess changes in profit related to variations in selling prices, costs, and volume.

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