Indicate whether the statement is true or false. ____ 1. In horizontal analysis, the current year is the base year. ____ 2. On a common-sized income statement, all items are stated as a percent of total assets or equities at year-end. ____ 3. The percentage analysis of increases and decreases in corresponding items in comparative financial statements is referred to as horizontal analysis. ____ 4. A financial statement showing each item on the statement as a percentage of one key item on the statement is called common-sized financial statements. ____ 5. The relationship of each asset item as a percent of total assets is an example of vertical analysis. ____ 6. Factors which reflect the ability of a business to pay its debts and earn a reasonable amount of income are referred to as solvency and profitability. ____ 7. Current position analysis indicates a company's ability to liquidate current liabilities. ____ 8. An advantage of the current ratio is that it considers the makeup of the current assets. ____ 9. Solvency analysis focuses on the ability of a business to pay its current and noncurrent liabilities. ____ 10. An increase in the accounts receivable turnover may be due to an improvement in the collection of receivables or to a change in the granting of credit and/or in collection practices. ____ 11. A decrease in the ratio of liabilities stockholders' equity indicates an improvement in the margin of safety for creditors. ____ 12. In computing the ratio of net sales to assets, long-term investments are excluded from average total assets. ____ 13. When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income. ____ 14. Accounting is an information system that provides essential data about the economic activities of an entity to various users to aid them in making informed judgments and decisions. ____ 15. Managerial accounting information includes both historical and estimated data. ____ 16. Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change. ____ 17. A diagram of the operating structure of an organization is called an organization chart