The Second Step in the Fundamental Analysis of Common Stock

question 48

Multiple Choice

The second step in the fundamental analysis of common stock is:

• A) company analysis.
• B) economy analysis.
• C) industry analysis.
• D) business cycle analysis.

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Definitions:

Income Summary Account

A temporary account used in closing process to transfer the balances of all revenue and expense accounts to Retained Earnings.

Income Summary

An account used in the closing process during the accounting cycle that summarizes revenues and expenses before transferring the net amount to retained earnings.

Net Income

The amount of money a company earns after deducting all its expenses, taxes, and costs from its total revenues, also known as net earnings or net profit.

Adjust Salaries

The process of modifying the amount of wages or salaries paid to employees, which may be done for reasons such as performance appraisals or inflation adjustments.