Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. Required: Why is this true? Give an example of a financial ratio that is meaningless to a service business
Because service-oriented companies do not sell a tangible product, they instead must sell their professional expertise and rely on alternative measures of their efficiency in marketing their services. For example, an law firm would keep detailed records of the hours worked on each client's case, monthly billings to each client, and the ratio of these billings to the average costs incurred on each case. Therefore, ratios like inventory turnover would be meaningless to a service business, like a law firm or a public accounting firm.
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The primary current source of generally accepted accounting principles for nongovernmental operations is the
a. American Institute of Certified Public Accountants. b. Securities and Exchange Commission. c. Financial Accounting Standards Board. d. Governmental Accounting Standards Board.
The only difference between the direct and the indirect methods is the:
a. presentation of the cash flows from investing activities. b. presentation of the cash flows from financing activities. c. presentation of the cash flows from operating activities. d. presentation of the cash flows from noncash activities.
Enumerated or bulleted lists
a. should be placed only in an appendix section of a business document. b. detract from the flow of the written message. c. can be used to add visual impact to items in a series. d. result in too much wasted white space in a business document.
An administrative law judge is entitled to ____ immunity for statements made during administrative proceedings
Fill in the blanks with correct word