Comparing Expenses to Prior Years' Expenses Is an Effective Analytical

question 96

Multiple Choice

Comparing expenses to prior years' expenses is an effective analytical procedure for accounts payable because expenses from year to year are:

• A) relatively stable.
• B) variable.
• C) erratic.
• D) dynamic.

---

Definitions:

Noncontrolling Interest

Represents the portion of equity in a subsidiary not attributable, directly or indirectly, to the parent company.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, typically with fixed dividends.

Variable Interest Entities (VIEs)

Entities in which an investor holds a controlling interest that is not based on a majority of voting rights, requiring special accounting treatment under financial reporting standards.

Voting Stock

Shares that give the shareholder the right to vote on important company decisions, essentially similar to voting common stock but may include different classes of stock.