Answer True or False
1. Every adjustment involves at least one income statement and one balance sheet account.
2. Adjusting entries are recorded at the need of each accounting period so that net income is accurately reflected in the financial statements for the period.
3. Most businesses have an operating cycle of greater than one year.
4. A balance sheet shows cash $75,000; marketable securities, $115,000; accounts receivable, $150,000 and $222,500 of inventories. Current Liabilities are $225,000. The current ratio is 2.5 to 1.
5. An auto repair company is not an example of a manufacturer.
6. Assets can be tangible or intangible in nature.
7. Bondholders are external users of company’s accounting information
8. Profits from operating activities distributed to business owners are called bonuses.
9. Gross margin as a percentage of sales is a common analytical tool for service companies.
10. The three forms or states in the development of inventory for a manufacturer are direct materials, direct labor, and finished goods
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