1) A profitable utility will maintain a high operating ratio.
2) It would always be conservative to value inventory at market.
3) The cash ratio is usually a good indication of the liquidity of the firm.
4) T-accounts have a left, or credit, side and a right, or debit, side.
5) Most regulated utilities have very high receivables.
6) With a stock dividend, total market value considering all outstanding shares should
decline.
7) When a stock split occurs, earnings per share must be adjusted retroactively.
8) A corporation is considered to be a legal entity separate and distinct from the
stockholders.
9) When analyzing a firm’s long-term, debt-paying ability, we only want to determine
the firm’s ability to pay the principal.
10) In general, SFAS No. 116 directs that contributions received by not-for-profit
organizations are recognized as revenues in the period received at their fair value.
11) Current assets are listed on the balance sheet in order of liquidity.
12) Some government and not-for-profit organizations have added budgeting by
objectives and/or measures of productivity to their financial reporting.
13) For a regulated utility, the first item listed under liabilities and equity is
capitalization.
14) Days’ sales in receivables may be abnormally high at the end of the year if sales
volume expanded materially late in the year.
15) When performing year-to-year change analysis, a meaningful percent change cannot
be computed when one number is positive and the other number is negative.