In Vertical Analysis, the Base Amount for Salaries and Wages

question 124

Multiple Choice

In vertical analysis, the base amount for salaries and wages expense is generally

• A) net sales.
• B) salary & wages expense in a previous year.
• C) gross profit.
• D) net income.

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Definitions:

Amortization

The gradual reduction of a debt over a period of time through regular payments that cover both principal and interest.

Net Book Value

The total value of a company's assets minus its liabilities and intangible assets, indicating the net worth of the company's tangible assets.

Consolidated Net Income

The combined net income of a parent company and its subsidiaries, factoring in the effects of intercompany transactions.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recorded at cost and subsequently adjusted for the investor’s share of the net profits or losses of the investee.