Financial Reporting and Analysis: Using Financial Accounting Information 13th Edition

Thomson One; Chapter 1 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 1 THOMSON ONE This exercise introduces the use of Thomson ONE. This exercise introduces the use of Thomson ONE. This exercise introduces the use of

Chapter 01 1 TO THE NET 1. a. The Mission of the Financial Accounting Standard Board (FASB) The mission of the FASB is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other

Thomson One; Chapter 10 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 10 THOMSON ONE This Thomson ONE exercise,

Chapter 10 TO THE NET 1. a. Item 1 Business History Northrop Grumman Corporation ( herein referred to as Northrop Grumman the company, we, us, or our) is an integrated enterprise consisting of businesses that address the global security spectrum from undersea to outer Northrop

Thomson One; Chapter 11 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 11 THOMSON ONE This Thomson ONE case provides for the review of profitability ratios using Thomson This Thomson ONE case provides for the review of

Chapter 11 TO THE NET 1. a. Kimberly-Clark Corporation was incorporated in Delaware in 1928. We are a global company focused on leading the world in essentials for a better life through product innovation and building our personal care, consumer tissue, K-C Professional & Other and health

Thomson One; Chapter 12 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 12 THOMSON ONE This Thomson ONE exercise

Chapter 12 409 TO THE NET 1. a. Item 1 Business Market Area Competition The bank contends with considerable competition both in generating loans and attracting deposits. The bank contends with considerable competition both in generating loans and attracting deposits. The bank contends with considerable competition both

Chapter 13 TO THE NET 1. The following questions can be discussed using Facts About GASB: a. What is the GASB? b. Why is the GASBs work important? c. How does the GASB set standards? d. How can one access GASB information and communications? b.

Thomson One; Chapter 2 Page 1 of 5 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 2 THOMSON ONE This Merck & Company

Chapter 02 TO THE NET 1. COSO was originally formed in 1985 to sponsor the National Commission on Fraudulent Financial Reporting, an independent private sector initiative which studied the casual factors that can lead to fraudulent financial reporting and developed recommendations for public companies and their independent

Thomson One; Chapter 3 Page 1 of 1 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 3 THOMSON ONE This Thomson ONE exercise

Chapter 03 TO THE NET 1. a. $523,050,000 b. $467,707,000 c. These shares have been issued, bought back and not retired 2. a. $4,345,548,000 b. $467,707,000 c. These shares have been issued, bought back and not retired 2. a. $4,345,548,000 b. $467,707,000

Thomson One; Chapter 4 Page 1 of 1 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 4 THOMSON ONE This Thomson ONE exercise

Chapter 04 77 TO THE NET 1. a. $1,208,000,000 Balance Sheet b. $15,000,000 1. a. $1,208,000,000 Balance Sheet b. $15,000,000 1. a. $1,208,000,000 Balance Sheet b. $15,000,000 c. Equity earnings (losses) are the investors proportionate share of the investees earnings (losses). c. Equity earnings

Thomson One; Chapter 5 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 5 THOMSON ONE 1. This Thomson ONE

Chapter 05 1 To The Net 1. ALEXANDER & BALDWIN, INC. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per-share amounts) Years Ended December 31 In Millions 2010 2009 2008 (In millions) Operating revenue: Ocean transportation

Thomson One; Chapter 6 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 6 THOMSON ONE 1. This

Chapter 06 128 TO THE NET 1. a. 1. Quaker develops, produces, and markets a broad range of formulated chemical specialty products for various heavy industrial and manufacturing applications and, in addition, offers and markets chemical management chemical specialty products for various heavy industrial and

Thomson One; Chapter 7 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 7 THOMSON ONE 1. This Thomson ONE

Chapter 07 188 TO THE NET 1. a. Item 1. Business The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products worldwide entertainment company with operations in four business

Thomson One; Chapter 8 Page 1 of 2 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 8 THOMSON ONE 1. This

Chapter 08 222 TO THE NET 1. a. Item 1 business Google is a global technology leader focused on improving the ways people connect with information. b. 2008 2009 2010 Revenue 100.0 108.5 134.5 Income from operations 100.0 125.3

Thomson One; Chapter 9 Page 1 of 3 Thomson ONE solutions Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Gibson, Financial Reporting & Analysis: Using Financial Accounting Information, 13e Chapter 9 THOMSON ONE 1. This

Chapter 09 TO THE NET 1. Belden a. Earnings per common share (basic and diluted) 2010 2009 2008 Basic income (loss) per share: Continuing operations $ 1.48 $ (0.16)

1 Chapter 1 Introduction to Financial Reporting QUESTIONS 1- 1. a. The AICPA is an organization of CPAs that prior to 1973 accepted the primary responsibility for the development of generally accepted accounting principles. Their role was substantially reduced in 1973 when the Financial Accounting Standards Board

11 CASES CASE 1-1 STANDARD-SETTING: "A POLITICAL ASPECT" (This case provides an opportunity to view some of the political aspects of standard setting.) a. The hierarchy of accounting qualities in SFAC No. 2 includes neutrality as one of the ingredients. SFAC No.2 indicates that, to be reliable,

25 Chapter 2 Introduction to Financial Statements and Other Financial Reporting Topics QUESTIONS 2- 1. a. Unqualified opinion with explanatory paragraph b. Unqualified opinion with explanatory paragraph c. Unqualified opinion d. Adverse opinion e. Qualified opinion c. Unqualified opinion d. Adverse opinion e. Qualified

35 CASES CASE 2-1 THE CEO RETIRES Teaching Note: The CEO Retires (Teaching note prepared by the American Accounting Association) PURPOSE: This case is meant to illustrate that the accounting choices available can be used by management to manipulate the reported financial results of the company.

48 Chapter 3 Balance Sheet QUESTIONS 3-1. Assets - Resources of the firm Liabilities Debts or obligations of the firm; creditors' interest Shareholders Equity - Owners' interest in the firm Liabilities Debts or obligations of the firm; creditors' interest Shareholders Equity - Owners' interest in

58 PROBLEM 3-8 a. Noncontrolling interest will be 20% of the total equity of $300,000, or $60,000. a. Noncontrolling interest will be 20% of the total equity of $300,000, or $60,000. a. Noncontrolling interest will be 20% of the total equity of $300,000, or $60,000.

66 CASES CASE 3-1 CONVENIENCE FOODS (This case provides an opportunity to review a moderately complicated balance (This case provides an opportunity to review a moderately complicated balance (This case provides an opportunity to review a moderately complicated balance sheet.) a. 1. The financial statements of the

77 Chapter 4 Income Statement QUESTIONS 4- 1. Extraordinary items are events or transactions that are distinguished by their unusual nature and infrequency of occurrence. They might include casualty losses or losses from expropriation or prohibition. They must be shown separately, net of tax, in order that trend

87 PROBLEM 4-13 a. 1. Receipt of cash: Sales, 210,000 ounces x $300 = $ 63,000,000 Cost of goods sold (1), 210,000 ounces x $250 = (52,500,000) Gross profit $ 10,500,000 Selling expenses (2,000,000) Administrative expenses

100 Chapter 5 Basics of Analysis QUESTIONS 5 - 1. A ratio is a fraction comparing two numbers. Ratios make the comparisons in relative, rather than absolute, terms, which helps alleviate the problem of size difference. relative, rather than absolute, terms, which helps alleviate the problem of size

110 Problem 5-3 Continued (In Percentage) Liabilities and Stockholders Equity 2010 2009 Current liabilities: Short-term borrowings and current portion of long- term debt 5.8 6.1 Accounts payable and accrued liabilities 13.3 13.9 Accrued payroll and

128 Chapter 6 Liquidity of Short-term Assets: Related Debt-Paying Ability QUESTIONS 6- 1. In the very short run, the procedure of making more funds available by slowing the rate of payments on accounts payable would work and the firm would have more funds to purchase inventory, which would

138 PROBLEM 6-5 a. 365 days = 365 = 10.14 times per year Accounts receivable turnover in days 36 b. 365 days = 30.42 days 12.0 times per year c. Gross Receivables = $280,000 = 47.36 days Net Sales/365 $2,158,000/365

148 d. Days' Sales in Receivables: Gross Receivables = $50,000 = 4.56 days Net Sales/365 $4,000,000/365 e. Days' Sales in Inventory: Ending Inventory = $400,000 = 81.11 days Cost of Goods Sold/365 $1,800,000/365 f. The days' sales in receivables and the days' sales in

158 2007: 56.17 + 65.93 = 122.10 8. Working Capital = Current Assets Current Liabilities 2011: $305,200 $109,500 = $195,700 2010: $303,000 $110,000 = $193,000 2009: $303,000 $113,500 = $189,500 2008: $301,000 $114,500 = $186,500 2007: $297,000 $115,500 = $181,500 9. Current Ratio = Current Assets Current Liabilities 2011: $305,200

168 PROBLEM 6-26 ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS ETHICS vs. PROBLEM 6-26 ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS ETHICS vs. PROBLEM 6-26 ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS ETHICS vs. CONSERVATISM a. 1. Current balance $2,000 Needed to adjust 4,050 Adjusted balance $6,050 This will add $4,050

176 3. Days Sales in Inventory Ending Inventory Cost of Goods Sold/365 2010 2009 $3,155,000,000 $2,639,000,000 $13,831,000,000/365 $12,109,000,000/365 83.26 days 79.55 days 4. Inventory Turnover Cost of Goods Sold Year-End Inventory 2010 2009 $13,831,000,000 $12,109,000,000 $3,155,000,000 $2,639,000,000

188 Chapter 7 Long-Term Debt-Paying Ability QUESTIONS 7- 1. Yes, profitability is important to a firm's long-term, debt- paying ability. Although the reported income does not agree with cash available in the short run, eventually the revenue and expense items do result in cash movements. Because there

198 3. Debt/Equity Ratio = Total Liabilities Stockholders Equity $193,000 = 47.4% $407,000 4. Debt to Tangible Net Worth Ratio = Total Liabilities Tangible Net Worth $193,000 = 49.9% $407,000 $20,000 b. New asset structure for all plans: Assets Current Assets $

207 CASES CASE 7-1 OUTSOURCED SERVICES (This case provides an opportunity to review capitalized interest.) a. 2010 2009 Income statement interest expense $ 40,707,000 $ 28,518,000 Capitalized interest 4,100,000 4,900,000 Total interest $ 44,807,000 $ 33,418,000 b. 2010

222 Chapter 8 Profitability QUESTIONS 8- 1. Profits can be compared to the sales from which they are the residual. They can be compared to the assets that generate sales. Or, they can be viewed as return to the owner. Each measure looks at profits differently. The

232 5. Operating Income Margin = Operating Income Net Sales 2011 2010 2009 (2) Net sales $ 1,600,000 $ 1,300,000 $ 1,200,000 Less: Material and manufacturing costs of products sold 740,000

242 h. Common stock is sold. i. A fixed asset is sold for less than book value. j. Bonds are converted into common stock. 0 - 0 0 - 0 + - + 242 h. Common stock is sold. i. A fixed asset is sold for less than book value.

252 12. Return on Common Equity = Net Income Before Nonrecurring Items Preferred Dividends Average Common Equity Average Balance Sheet Figures 2011: $72,700 $6,400 $6,300 = 13.36% ($520,000 $70,000 + $518,000 $70,200)/2 2010: $64,900 $6,400 $6,300 = 11.69% ($518,000 $70,000 + $515,000 $70,000)/2

262 5. Return on Operating Assets = Operating Income Year-End Operating Assets 2010 2009 $437,975 $284,349 ($1,161,519 + $1,886,130 + $99,156) ($1,055,380 + $1,897,853+ $91,000) $3,146,805 $3,044,233 13.92% 9.34% 6. Sales to Fixed Assets = Net Sales

268 CASE 8-6 RETURN ON ASSETS INDUSTRY COMPARISON (This case represents the opportunity to compare two companies from different industries on how Net Profit Margin and Total Asset Turnover impacted Return on (This case represents the opportunity to compare two companies from different industries on how Net Profit Margin

277 Chapter 9 For the Investor QUESTIONS 9- 1. Earnings per share is the amount of income earned on a share of common 9- 1. Earnings per share is the amount of income earned on a share of common 9- 1. Earnings per share is the amount of

287 PROBLEM 9-9 a. Numerator Denominator Net income $ 200,000 Preferred dividends (10,000) Common shares outstanding on January 1 20,000 shares Common stock issue on July 1, 5,000

297 Fiscal year ended October 3, 2009 statements September 27, 2008 $5.78 Fiscal year ended October 2, 2010 statements September 27, 2008 $5.80 4. Not aware why the amount reported in 2009 and 2010 was not adjusted to ($5.76) for 2008. 4. Not aware why the amount reported in

312 Chapter 10 Statement of Cash Flows QUESTIONS 10- 1. The basic justification for a statement of cash flows is that the balance sheet and the income statement do not adequately indicate changes in cash. The balance sheet indicates the position of the firm at

322 b. SAMPSON COMPANY Statement of Cash Flows For Year Ended December 31, 2011 Cash flow from operating activities: Cash flow from customers $ 138,000 ($145,000 $7,000) Cash payments to

332 f. 3 Revenue from services represents an operating inflow. g. 3 Inventory represents an operating activity. h. 5 Short-term investments in marketable securities is part of cash and cash equivalents. i. 5 Cash inflows from sale of property, plant, and equipment represents cash inflows related to investing activities.

341 CASE 10-4 THE RETAIL MOVER (This case represents a firm on the verge of bankruptcy. The company is W.T. Grant. The years in the case are not the actual years. (This case represents a firm on the verge of bankruptcy. The company is W.T. Grant. The years

354 Chapter 11 Expanded Analysis QUESTIONS 11- 1. Based on the study reported in the text, liquidity and debt ratios are regarded as the most significant ratios by commercial loan officers. as the most significant ratios by commercial loan officers. as the most significant ratios by commercial loan

364 7. Acid-Test Ratio = Cash Equivalents + Marketable Securities + Accounts Receivable Current Liabilities $64,346 + $99,021 = 2.22 $73,730 8. Cash Ratio = Cash Equivalents + Marketable Securities Current Liabilities $64,346 = 0.87 $73,730 Debt: 1. Debt Ratio = Total Liabilities

374 (15) Land, Buildings, and Equipment: Let: A = land, buildings, and equipment D = accumulated depreciation N = net fixes assets A D = N A [(A/3*)] = $195,000 x 2/3A = $195,000 A = $292,500 *From Ratio of Depreciation to Cost (16)

384 c. No. Return on average assets before interest and taxes (third goal) is equal to return on sales before interest and taxes (first goal) times turnover of average assets (second goal). If Calcor Company achieved the first two goals, the return on average assets before interest and taxes would

394 CASE 11-4 BOOKS UNLIMITED (Part 1) (This case provides the opportunity to review Borders Group, Inc.) (This case provides the opportunity to review Borders Group, Inc.) (This case provides the opportunity to review Borders Group, Inc.) a. Liquidity Ratios

400 CASE 11-5 BOOKS UNLIMITED (Part 2) (This case provides the opportunity to review Borders Group, Inc. per the 10-K for the fiscal year ended January 29, 2011.) This comment is included in Note 1: On February 16, 2011 (the

409 Chapter 12 Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies QUESTIONS 12- 1. Interest income, service charges, and earnings in investments are the main sources of revenue for banks. 12- 2. Loans are assets because they are an investment of the

419 b. The operating ratio decreased, indicating improved efficiency. Funded debt to operating property decreased, indicating less risk because a lower percentage of funds were supplied by funded debt. operating property decreased, indicating less risk because a lower percentage of funds were supplied by funded debt. operating property decreased, indicating

426 b. Horizontal Common-Size For the Years Ended December 31 Total United States Europe Africa Asia and other 2010 Sales and other operating revenues Unaffiliated customers Inter-company Total revenues 100.0 100.0 100.0 26.9 100.0 28.1

436 Chapter 13 Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations QUESTIONS 13- 1. Personal financial statements may be prepared for an individual, a husband and wife, or a larger family group. 13- 2. The basic personal financial statement is the Statement of Financial

446 PROBLEM 13-8 a. City of Toledo Revenues Business-Type Activities Charge for Services Vertical Common-Size Business-type activities: 2003 2004 2005 2006 2007 2008 2009 2010 Charges for services:

1) Accounting policies that result in the fastest reporting of income are the most conservative. Answer: F Answer: F Answer: F 2) The principal of fiduciary funds may be distributed. Answer: F Answer: F Answer: F 3) In order to compute gross profit margin, the income statement must be in single-step format. Answer: F Answer: F Answer: F 4) Electric utilities that

1) Presently, no regulatory agency, such as the Securities and Exchange Commission or the Financial Accounting Standards Board, accepts responsibility for determining either the content of financial ratios or the format of presentation in annual reports. Answer: T Answer: T Answer: T 2) An adverse opinion states that, except for the effects of the matter(s)

1) Under the allowance method, the charge off of a specific account receivable does not influence the income statement nor the net receivable on the balance sheet at the time of the charge off. Answer: T Answer: T Answer: T 2) Among the many responsibilities of the PCAOB is to adopt accounting standards. Answer: F Answer: F Answer: F 3)

1) A profitable utility will maintain a high operating ratio. Answer: F Answer: F Answer: F 2) It would always be conservative to value inventory at market. Answer: F Answer: F Answer: F 3) The cash ratio is usually a good indication of the liquidity of the firm. Answer: F Answer: F Answer: F 4) T-accounts have a left, or credit, side

1) Stock appreciation rights give the employee compensation at a future date, based on the market price at the date of exercise in excess of a pre-established dollar market. Answer: T Answer: T Answer: T 2) The stockholders' equity section of an insurance company will usually appear similar to the stockholders' equity section of other

1) It is generally perceived that utilities that have cash flow problem will not be increasing their dividend. Answer: T Answer: T Answer: T 2) A service firm will usually have a low amount of inventory, consisting primarily of supplies. Answer: T Answer: T Answer: T 3) Interim reports are usually audited. Answer: F Answer: F Answer: F 4) Generally accepted accounting

1) Relevance and reliability are two primary qualities that make accounting information useful for decision making. Answer: T Answer: T Answer: T 2) Ethics can be a particular problem with financial reports. Answer: T Answer: T Answer: T 3) In analysis of income, for purposes of determining a trend, extraordinary items should be included. Answer: F Answer: F Answer: F 4) The straight-line

1) Ideally, a proposed comprehensive budget should be compared with financial ratios that have been agreed upon as part of the firm's corporate objectives. Answer: T Answer: T Answer: T 2) In practice, some of the required information in the 10-K is incorporated by reference. Answer: T Answer: T Answer: T 3) The LIFO inventory costing method results

1) Return on investment will typically be lower than return on equity. Answer: T Answer: T Answer: T 2) Dissimilar year ends will have no impact on the results of ratios. Answer: F Answer: F Answer: F 3) The rating for an industrial revenue bond represents the probability of default by the governmental unit. Answer: F Answer: F Answer: F 4) Transactions

1) The market will not be efficient if it does not have access to relevant information or if fraudulent information is provided. Answer: T Answer: T Answer: T 2) To get a better indication of a firm's ability to cover interest payments in the long run, the noncash charges for depreciation, depletion, and amortization can

1) When preferred stock has a preference as to dividends, the current year's preferred dividend must be paid before a dividend can be paid to common stockholders. Answer: T Answer: T Answer: T 2) The statement of changes in net worth is presented in terms of realized increases (decreases) and unrealized increases (decreases). Answer: T Answer:

1) The audit opinion of a public company is similar to an opinion for a private company except for the public company comments will be added as to the effectiveness of internal control over financial reporting. Answer: T Answer: T Answer: T 2) Stock appreciation rights can have a material impact on reported earnings. Answer: T Answer:

1) Current assets are assets that (1) are in the form of cash, (2) will be realized in cash, or (3) conserve the use of cash within the operating cycle of a business or for one year, whichever is shorter. Answer: F Answer: F Answer: F 2) Earnings per share is the earnings per

1) For a business combination, the purchase method views the business combination as the acquisition of one entity by another. The firm doing the acquiring records the identifiable assets and liabilities at fair value at the date of acquisition. Answer: T Answer: T Answer: T 2) Under GASB Statement No. 34, the notes to

1) Retained earnings always shows a positive balance. Answer: F Answer: F Answer: F 2) Nonrecurring items such as extraordinary income and disposal of a segment require separate earnings per share disclosure. Answer: T Answer: T Answer: T 3) Relevance is a quality requiring that the information be timely and that it also have predictive value or feedback

1) Generally accepted accounting principles and the Internal Revenue Code of tax law require that the same depreciation method be used for both the financial statements and the federal tax return. Answer: F Answer: F Answer: F 2) The financial literature and valuation books strongly support the use of multiperiod discounted valuation model either

1) A quasi-reorganization is an accounting procedure equivalent to an accounting fresh start. Answer: T Answer: T Answer: T 2) Contingent liabilities are recorded as a liability only if the loss is considered substantial and the amount is reasonably determinable. Answer: F Answer: F Answer: F 3) Working capital is considered to be more indicative of the short-term,

1) Loans to deposits for a bank is a type of debt coverage ratio. Answer: T Answer: T Answer: T 2) Cash flow per share can be viewed as a substitute for earnings per share in terms of a firm's profitability. Answer: F Answer: F Answer: F 3) Cash flow per share is usually higher than earnings per share. Answer:

1) Noncontrolling interest relects income from ownership of noncontrolling shareholders in the equity of consolidated subsidaries less than wholly owned. Answer: T Answer: T Answer: T 2) The principal asset of a merchandising firm will usually be accounts receivable. Answer: F Answer: F Answer: F 3) There are three methods of accounting for a business combination. Answer: F Answer: F Answer:

1) In the ratio funded debt to operating property for a utility, construction in progress is a component of operating property. Answer: T Answer: T Answer: T 2) For a public company, the SEC requires that a report be filed annually on its internal control systems. Answer: T Answer: T Answer: T 3) The accounting for a nonprofit

1) Accounting Trends & Techniques is a compilation of data obtained by a survey of annual reports to stockholders undertaken for the purpose of analyzing the accounting information disclosed in such reports. Answer: T Answer: T Answer: T 2) A firm might have a low dividend payout ratio if it were planning a major

1) Some industry practices lead to accounting reports that do not conform to the general theory that underlies accounting. Answer: T Answer: T Answer: T 2) Dividend yield relates dividends per share to market price per share. Answer: T Answer: T Answer: T 3) The financial statements of legally separate entities may be issued to show the financial position

1) The accrual basis needs numerous adjustments at the end of the accounting period. Answer: T Answer: T Answer: T 2) In 2007, the Securities and Exchange Commission announced that it would accept financial statements from foreign private issues without reconciliation to U.S. GAAP if they are prepared using IFRS as issued by the

1) Web sites are not very useful when performing analysis. Answer: F Answer: F Answer: F 2) The statement of cash flows should be reviewed for several time periods in order to determine the major sources of cash and the major uses of cash. Answer: T Answer: T Answer: T 3) The operating cash flow/current maturities of long-term

1) A decline in the acid-test ratio indicates a reduced ability to pay current liabilities with funds from the sale of inventory. Answer: F Answer: F Answer: F 2) To the extent that money does not remain stable, it loses its usefulness as the standard for measuring financial transactions. Answer: T Answer: T Answer: T 3) Real estate

1) Operating assets exclude investments, land, and intangibles from the asset base. Answer: F Answer: F Answer: F 2) The Governmental Accounting Standards Board is a branch of the Financial Accounting Foundation. Answer: T Answer: T Answer: T 3) The accrual basis of accounting recognizes revenue when realized (realization concept) and expenses when incurred (matching concept). Answer: T Answer: T Answer:

1) Gross profit will be a prominent figure on a single-step income statement. Answer: F Answer: F Answer: F 2) If the company closes the year when the activities are at a peak, the number of days' sales in inventory would tend to be overstated and the liquidity would be overstated. Answer: F Answer: F Answer: F 3)

1) When a firm is expensing an item faster on the tax return than on the financial statements, a deferred tax liability is the result. Answer: T Answer: T Answer: T 2) Accounting standards codification TM reorganizes the accounting pronouncements into approximately 90 accounting topics. Answer: T Answer: T Answer: T 3) Sometimes financial statements are presented without

1) Predictive value, feedback value, and timeliness are ingredients needed to ensure that the information is reliable. Answer: F Answer: F Answer: F 2) For a statement of financial condition, the figure that will usually be most important is the total asset amount. Answer: F Answer: F Answer: F 3) The accountant records only the events that affect the