1. Which of the following is the true purpose of information presented in notes to the financial statements?
(a) To provide disclosures required by generally accepted accounting principles.
(b) To correct improper presentation in the financial statements.
(c) To provide recognition of amounts not included in the totals of the financial statements.
(d) To present management’s responses to auditor comments.
2. Which of the following information should be included in Melay, Inc.’s 2011 summary of significant accounting policies?
(a) Property, plant, and equipment is recorded at cost with depreciation computed principally by the straight-line method.
(b) During 2011, the Delay Segment was sold.
(c) Business segment 2011 sales are Alay $1M, Belay $2M, and Celay $3M.
(d) Future common share dividends are expected to approximate 60% of earnings.