Common-Size Financial Statements Are Based on

question 6

Multiple Choice

Common-size financial statements are based on

• A)percentages of other numbers on the same statements.
• B)a percent comparison of other companies in the same industry.
• C)a common way of preparing certain types of financial statements.
• D)percentages of increases and decreases compared to the previous accounting period.

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Definitions:

Liabilities

Financial obligations or debts owed by a company to creditors or suppliers, which must be settled over time.

Posting

the process of transferring journal entries to respective accounts in the ledger.

Ledger

A book or electronic record used to record all of a company's financial transactions in chronological order.

T-account

A graphical representation used in accounting to illustrate the effects of transactions on account balances, with debits on the left and credits on the right.