Question
Question 1 Financial statements are designed to meet the needs of specific financial statement user groups. Question 1 options: True False Question 2 The accounting
Question 1
Financial statements are designed to meet the needs of specific financial statement user groups.
Question 1 options:
| True |
| False |
Question 2
The accounting profession assumes that financial statement users have a reasonable knowledge of business.
Question 2 options:
| True |
| False |
Question 3
A company has an obligation to provide highly detailed information on its financial statements.
Question 3 options:
| True |
| False |
Question 4
Vertical analysis of a balance sheet involves converting each component to a percentage of stockholders' equity.
Question 4 options:
| True |
| False |
Question 5
Small percentage changes in an amount from a company's financial statements may still represent large dollar amounts; therefore, analysts should examine changes in both absolute dollar amounts and percentages.
Question 5 options:
| True |
| False |
Question 6
When performing horizontal analysis, analysts should examine changes in both absolute dollar amounts and percentages, as well as the underlying reasons for the change.
Question 6 options:
| True |
| False |
Question 7
A vertical analysis calculates percentages to compare individual parts of a statement to a key figure on that statement. For example, on an income statement, each item could be shown as a percentage of sales.
Question 7 options:
| True |
| False |
Question 8
A drawback of studying absolute amounts reported in financial statements is the problem of differing materiality levels.
Question 8 options:
| True |
| False |
Question 9
While horizontal analysis examines the behavior of items over two or more accounting periods, vertical analysis compares many items within the same period of time.
Question 9 options:
| True |
| False |
Question 10
The current ratio and quick ratio are similar in that both are used to assess a company's ability to pay short-term obligations, but they differ in that the quick ratio excludes the least liquid current assets from the numerator.
Question 10 options:
| True |
| False |
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