A. Footnotes should explain balance sheet figures and help users interpret the balance sheet

A. balance sheet

b. statement of cash flows

c. income statement

d. statement of retained earnings

2. Which of the following financial statements would show how quickly a hospitality operation could convert assets into cash?

a. income statement

B. balance sheet

c. statement of cash flows

d. aging of accounts payable report

3. Cecil, the general manager of a hotel, picks up a balance sheet from the end of the previous fiscal year, which ended December 31. He is gathering information to prove to creditors that the hotel is able to pay its debts. If the current date is July 14:

A. the balance sheet is too outdated to be helpful.

b. the balance sheet’s assets may need to be updated.

c. Cecil may use the balance sheet for one-and-a-half more months, after which the statement will be useless.

d. a few corrections to the footnotes may be all that is necessary to update the statement.

4. All of the following items are shown on the balance sheet of a hospitality company except:

a. accounts payable.

b. accounts receivable.

c. intangible assets.

D. employee training expenses.

5. Among current assets, the category Cash includes all of the following except:

a. checking and savings accounts.

B. bank accounts with restricted use.

c. certificates of deposit.

d. house banks.

6. All of the following are considered current liabilities except:

A. deferred income taxes.

b. advance deposits on rooms.

c. payables resulting from the purchase of services.

d. obligations relating to fixed asset purchases to be paid in the current period.

7. Which of the following would be included in the Investments category on the balance sheet?

a. all marketable securities

B. property not currently used in operations

c. notes receivable due within twelve months

d. leasehold improvements

8. The class of assets on the balance sheet that includes land, buildings, and furnishings that are in use is:

a. fixed assets.

B. property and equipment.

c. investments.

d. liabilities.

9. Which of the following statements best summarizes the role of footnotes on a balance sheet?

a. Footnotes should explain balance sheet figures and help users interpret the balance sheet.

b. Footnotes should contradict balance sheet information.

c.Footnotes are meant to provide the details that the balance sheet presents only in summary form.

d. Footnotes soften the disclosure of financial statements.

10. Which of the following statements about consolidated financial statements is true?

a. Consolidated financial statements make footnotes unnecessary.

b. Consolidated financial statements are required of all companies in the United States.

c. The subsidiaries of corporations cease to be separate legal entities when their parent corporations use consolidated financial statements.

D. Generally, most of the voting stock of a subsidiary should be owned by the holding company or by the same interests if the associated companies’ financial statements are to be combined.

Chapter 7 Specialized Journals and Subsidiary Ledgers