Accounting Final Review T/F
A consolidated income statement is a summary statement of all the departmental income statements of a property
True
A debit balance in the Retained Earnings account is identified as a deficit
True
Common size analysis expresses each item within a financial statement in terms of a percent of a base amount
True
Dividends may be declared and paid in cash or stock
True
In a partnership each partner is personally and individually liable for all partnership liabilities
True
In a partnership the same basis of division usually applies to both net income and net loss
True
In a vertical analysis of an income statement, each item on the income statement is expressed as a percentage of sales
True
Intracompany comparisons of the same financial statement items can often detect changes in financial relationships and significant trends
True
Inventory turnover measures the number of times on the average the inventory was sold during the period
True
Liquidity ratios compare current assets to current liabilities because it is assumed that current liabilities will be paid out of current assets
True
Merchandise inventory is classified as a current asset on a classified balance sheet
True
Organization costs are expenses immediately, even thought they conceptually benefit the corporation over its entire life
True
Profitability ratios are frequently used as a basis for evaluating management's operating effectiveness
True
The payment of interest on bonds payable is classified as a cash outflow from operating activities
True
The preparation of a statement of cash flows involves three major steps: determine net increase or decrease in cash, determine net cash provided by operating activities, and determine next cash flows provided by investing and financing activities.
True
When preferred stock is cumulative, preferred dividends not declared in a given period are called dividends in arrears
True
Diversification in American industry enhances the usefulness of financial analysis
False
Each partner's initial investment in a partnership should be recorded at the book value of the asset at the date of their transfer to the partnership
False
For external reporting, a company must prepare either an income statement or a statement of cash flows, but not both
False
Gross profit is a measure of the overall profitability of a company
False
Horizontal, vertical, and circular analyses are the most common tools of financial statement analysis
False
If a corporation pays taxes on its income, then stockholders will not have to pay taxes on the dividends received from the corporation
False
In preparing a statement of cash flows, cash equivalents are subtracted from cash in order to compute the net change in cash during a period.
False
In the horizontal analysis of the income statement, each item is generally stated as a percentage of net income
False
Measures of a company's liquidity are concerned with the company's ability to service long-term debt
False
Selling expenses related to general operating activities such as personnel management
False
The amount of a cash dividend liability is recorded on the date of record because it is on that date that the persons or entities who will receive the dividend are identified
False
The statement of cash flows classifies cash receipts and payments as operating, nonoperating, financial, and extraordinary activities
False
Treasury stock purchased for $25 per share that is reissued at $20 per share, results in a Loss on Sale of Treasury Stock being recognized on the income statement
False
Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.
False
