1) If a business has several bank accounts, it will have a separate record for each of
them.
2) If the profit margin for a division is 11% and the investment turnover is 1.5, the rate
of return on investment computed would be 16.5%.
3) The primary accounting tool for controlling and reporting for cost centers is a budget
performance report.
4) Average cost is a method of inventory valuation.
5) Using the job order cost system, service business are able to bill clients on a weekly
or monthly basis, even when the job has not been completed.
6) In preparing a bank reconciliation, the amount indicated by a credit memorandum for
a note receivable collected by the bank is added to the cash balance per books.
7) The accrual basis of accounting requires revenue to be recorded when the service is
performed.
8) Accrual accounting does not require that the accounting records be updated prior to
preparing financial statements.
9) The ratio of the market price per share of common stock on a specific date to the
annual earnings per share is referred to as the price-earnings ratio.
10) The negotiated price approach allows the managers of decentralized units to agree
among themselves on a transfer price.
11) The indirect method of preparing the statement of cash flows reconciles net income
with net cash flows from operating activities.