1) Relevance and reliability are two primary qualities that make accounting information
useful for decision making.
2) Ethics can be a particular problem with financial reports.
3) In analysis of income, for purposes of determining a trend, extraordinary items
should be included.
4) The straight-line depreciation method is a conservative depreciation method.
5) Interim reports cover fiscal periods of less than one year.
6) It is generally recognized that the market is more efficient when dealing with small
firms that are not trading on large organized stock markets.
7) A balance sheet shows the financial condition of an accounting entity for a particular
period of time.
8) Long-term investments, usually stocks and bonds of other companies, are often held
to maintain a business relationship or exercise control.
9) In the case of air carriers, the cost of goods sold section of the income statement
looks similar to that of a steel manufacturer.
10) A low sales to working capital ratio tentatively indicates an unprofitable use of
working capital.