When you are interesting financial ratios, it is useful to compare a company\'s

Question

When you are interesting financial ratios, it is useful to compare a company's ratios to some form of standard. Interpreting financial analysis should be considered in light of conditions particular to the industry and the general economic conditions. Notes to the financial statements are generally not useful. An opinion stating that the financial statements present fairly the financial position, results of operations, and cash flows of the company is said to be qualified opinion. Unusual items affecting the prior period's income statement are common in accounting. When a corporation discontinuous a segment of its operations at a loss, should be reported as a item before income from continuing operations on the income statement. Managerial accounting reports are prepared according to generally accepted accounting principles. Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides sample opportunity for creativity and change.

Explanation / Answer

(62) When you are interpreting financial ratios, it is useful to compare a company’s ratios to some form of standard. TRUE ------------------------------------------------------------------------------------------------ (63) Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions. TRUE --------------------------------------------------------------------------------------------------- (64) Notes to the financial statements are generally not useful. Notes to the financial statements report the details and additional information that are left out of the main reporting documents, such as the balance sheet and income statement. This is done mainly for the sake of clarity because these notes can be quite long, and if they were included, they would cloud the data reported in the financial statements. FALSE -------------------------------------------------------------------------------------------------------- (65) An opinion stating that the financial statements present fairly the financial position, results of operations, and cash flows of the company is said to be qualified opinion. TRUE --------------------------------------------------------------------------------------------------- (66) unusual items affecting the prior period’s income statement are common in accounting. TRUE ----------------------------------------------------------------------------------------------------- (67) When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item before income from continuing operations on the income statement FALSE ------------------------------------------------------------------------------------------- (68) Managerial accounting reports are prepared according to generally accepted accounting principles. Managerial accounting need not follow Generally Accepted Accounting Principles. FALSE --------------------------------------------------------------------------------------------- (69) Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change. FALSE

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