Common-Size Financial Statements Recast Each Statement Item As

question 41

Multiple Choice

Common-size financial statements recast each statement item as: 

• A) a percentage of the "bottom line."
• B) a percentage using industry averages for the "base number."
• C) a percentage using a base year number for each line item.
• D) a percentage of some "base number" on the financial statement in question.

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Definitions:

Debits and Credits

Accounting terms used to record changes in balances within accounts, where debits increase asset or expense accounts and credits increase liability, equity, or revenue accounts.

Statement of Owner's Equity

A financial document that shows changes in the equity interest of a company's owners over a reporting period.

Beginning Capital

The amount of capital a business has at the start of a fiscal period, reflecting the company's financial state before operations commence.

Owner's Contributions

The capital or assets that a business owner injects into the business, either initially or to support operations or growth.