1) Financial statements provide information useful to management for decision-making. a) True b) False 2) The income statement gives a picture of the financial position of a business at a point in time. a) True b) False 3) The uniform system of accounts ensures that the financial statement figures of an individual establishment are the same as national average figures. a) True b) False 4) Departmental income statements are typical of the hotel industry. a) True b) False 5) Direct expenses are generally the responsibility of, and controllable by the department head concerned. a) True b) False 6) When a hotel practices responsibility accounting, departments can be identified as either cost centers or production centers. a) True b) False 7) Contributory income is the income for a department, after indirect expenses have been deducted. a) True b) False 8) Indirect expenses should be allocated to the various departments only on a ratio of departmental sales revenue to total sales revenue basis. a) True b) False 9) Indirect expenses are usually controllable by department managers. a) True b) False 10) A department with a high contributory income percent will, with an increase in sales revenue, yield more net income to the overall establishment, than would a department with a lower contributory income percentage having the same sales revenue increase. a) True b) False 11) The balance sheet shows the operating results of a business over a specific period. a) True b) False 12) Marketable and short -term securities are current assets. a) True b) False 13) A hotel's inventory of china, glass, and silver is usually shown as a current asset. a) True b) False 14) A mortgage is a type of long-term liability. a) True b) False 15) Retained earnings represent the accumulation of net incomes, less losses, and dividends, since a company started. a) True b) False 16) Retained earnings are part of the income statement. a) True b) False 17) Retained earnings are the link between the income statement and the balance sheet. a) True b) False 18) The liability and equity sections of a balance sheet show how the company's assets are currently financed. a) True b) False 19) A direct expense is: a) controllable by the accountant employed by the business b) deducted from a department's contributory income c) the responsibility of, and controllable by, a department head d) allocated to a department without a supporting invoice

217009 Test 1

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