1) Annual amortization of discount on bonds payable (bond discount) increases as a
bond matures.
2) The comparability of earnings per share across firms is influenced by the relative
amount of capital raised by the various firms and by the ability of the firms to manage
their reported earnings per share.
3) Companies have an economic incentive to supply the information investors want.
4) A low-credit-risk company generates operating cash flows substantially in excess of
what are required to sustain its business activities.
5) Common size income statements recast each statement item as a percent of total
assets.
6) Under IFRS, firms can elect to measure the noncontrolling interest at the book value
of the identifiable net assets at the acquisition date, which excludes goodwill from the
measurement of the noncontrolling interest.
7) Determining whether the allowance for uncollectibles is adequate requires judgment.
8) The elapsed time beginning with the initiation of production and ending with the
cash collection of the receivables from the sale of the product refers to the company’s
production cycle.
9) Stock prices only move up or down when financial reports are released and used by
investors to update their expectations about the company’s future earnings and cash
flows.
10) The volatility associated with pension plan accounting has been smoothed out with
respect to the determination of pension expense, other comprehensive income, and
balance sheet accounts.
11) Diluted earnings per share is a required disclosure for all corporations that have
outstanding preferred stock.
12) The difference between actuarial assumptions and actual experience for a given
year will not impact that year’s pension expense.
13) Under IFRS, a classified balance sheet may list accounts in the following order:
stockholders’ equity, long-term liabilities, current liabilities.
14) The amount of goodwill recognized on a consolidated balance sheet will always be
the same when accounting for a business combination under either the acquisition
method or the purchase method.