1. most assets are reported in the balance sheet at:

A) what it would cost to replace the asset.

B) the amount that the asset is worth to the managers of the business.

C) the historical cost incurred to acquire the asset.

D) the amount that would be received upon the sale of the asset.

2. A company has favorable financial leverage when:

A) it uses borrowed funds to earn a higher rate of return than the rate of interest paid for the borrowed money.

B) it issues debt rather than capital stock

C) earnings per share increase each year

D) bonds are issued at a discount because that reduces the amount of interest that needs to paid on the debt.

3. Book value of an asset is equal to:

A) acquisition cost less accumulated depreciation

B) acquisition cost less the estimated salvage value

C) depreciable cost less accumulated depreciation

D) depreciable cost divided by the estimated useful life