1) Retained earnings always shows a positive balance.
2) Nonrecurring items such as extraordinary income and disposal of a segment require
separate earnings per share disclosure.
3) Relevance is a quality requiring that the information be timely and that it also have
predictive value or feedback value or both.
4) Subsequent events are those that occur after the balance sheet date, but before the
statements are issued.
5) The IASC does not have authority to enforce its standards, but these standards have
been adopted in whole or in part by many countries.
6) The GASB has a seven-member board. A simple majority of four is needed to issue a
pronouncement.
7) The legality of distributions to stockholders is governed by federal law.
8) IFRS allows for alternative performance measures to be presented in the income
statement that are not allowed by U.S. GAAP.
9) DuPont analysis can be done with net income or operating income figures as long as
the related asset base is consistent.
10) If days’ sales in receivables are materially longer than the credit terms, this indicates
a collection problem.
11) Under governmental accounting, a fund is defined as a fiscal and accounting entity
with a self-balancing set of accounts.