1) Accounting policies that result in the fastest reporting of income are the most
conservative.
2) The principal of fiduciary funds may be distributed.
3) In order to compute gross profit margin, the income statement must be in single-step
format.
4) Electric utilities that have substantial construction work in progress are usually
viewed as being less risky investments than electric utilities that do not have substantial
construction work in progress.
5) The value of fixed rate mortgages could decline substantially if interest rates
decrease.
6) Equity earnings are excluded from earnings for the times interest earned coverage.
7) Compensating balances reduce the amount of cash available to the borrower to meet
obligations and they decrease the effective interest rate for the borrower.
8) Financial statements of legally separate entities may be issued to show financial
position, income, and cash flow as they would appear if the companies were a single
entity.
9) Some companies achieve benefits by hundreds of millions of dollars by a pension
termination.
10) High fixed costs in a period of low activity can cause a low net profit margin.