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.
2) Among the many responsibilities of the PCAOB is to adopt accounting standards.
3) Some employees prefer restricted stock over options because they receive actual
shares of stock.
4) From the point of view of analysis, the unqualified opinion without an explanatory
paragraph or explanatory language carries the highest degree of reliability.
5) The stockholders’ equity section of the balance sheet includes redeemable preferred
stock.
6) A given ratio is always computed the same way, no matter what the source.
7) The statement of cash flows is presented on a working capital basis.
8) Performance indicators for nonbusiness organizations are usually formal budgets and
donor restrictions.
9) The operating cash flow/total debt ratio is one that indicates a firm’s ability to meet
its current maturities of debt.
10) In vertical common-size analysis, the dollar figure for an account is expressed in
terms of that same account figure for a selected base year.
11) The efficient market hypothesis (EMH) relates to the ability of capital markets to
generate prices for securities that reflect worth.
12) State and local governments serve as a steward over public funds. This stewardship
responsibility dominates the accounting for state and local governments.