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Questions and Answers
What is the purpose of using comparability standards in financial statement analysis?
What is the purpose of using comparability standards in financial statement analysis?
- To determine the market share of a company
- To analyze the social impact of financial activities
- To identify similarities, differences, and trends in financial statements (correct)
- To calculate the total assets of an entity
Which standard is used to compare the financial statement of an entity with its direct competitor?
Which standard is used to compare the financial statement of an entity with its direct competitor?
- Intercomparability standard
- Industry standard
- Horizontal analysis
- Intracomparability standard (correct)
What does the intercomparability standard indicate when comparing the financial statement of an entity in different periods?
What does the intercomparability standard indicate when comparing the financial statement of an entity in different periods?
- The social responsibility initiatives undertaken by the entity
- The market capitalization of the entity
- The number of employees in the entity
- Decreases and increases in certain accounts (correct)
Which tool is used to analyze a series of financial statement data over a period of time?
Which tool is used to analyze a series of financial statement data over a period of time?
What does the industry standard compare the financial statement of an entity with?
What does the industry standard compare the financial statement of an entity with?
Which standard is used to indicate whether an entity underperformed or overachieved compared to its direct competitor?
Which standard is used to indicate whether an entity underperformed or overachieved compared to its direct competitor?
What is the purpose of vertical analysis?
What is the purpose of vertical analysis?
What does horizontal analysis do?
What does horizontal analysis do?
In vertical analysis, what does it mean if owner’s equity has a higher percentage part of total assets than the percentage part of liabilities?
In vertical analysis, what does it mean if owner’s equity has a higher percentage part of total assets than the percentage part of liabilities?
What is the formula for calculating the percentage increase or decrease of financial statement data?
What is the formula for calculating the percentage increase or decrease of financial statement data?
What technique is used to express the relationship between selected items in the financial statement?
What technique is used to express the relationship between selected items in the financial statement?
Which method is used to analyze individual lines of financial statement data to a base line item?
Which method is used to analyze individual lines of financial statement data to a base line item?
What does it indicate if an entity’s current assets comprise 58.33% of its total assets in a vertical analysis?
What does it indicate if an entity’s current assets comprise 58.33% of its total assets in a vertical analysis?
What type of analysis is also called trend analysis?
What type of analysis is also called trend analysis?
In the computation of percentage change, what amount serves as the basis or the starting point of the comparison?
In the computation of percentage change, what amount serves as the basis or the starting point of the comparison?
Which item is used as the base line amount in a vertical analysis?
Which item is used as the base line amount in a vertical analysis?
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