Common Size Income Statements Make It Easier to Compare Firms

question 52

Multiple Choice

Common size income statements make it easier to compare firms

• A)that use different inventory valuation methods (FIFO vs.LIFO).
• B)in different industries.
• C)with different degree of leverage.
• D)of different sizes.

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Definitions:

Tangible

Referring to physical objects or assets that can be seen, touched, and quantified, as opposed to intangible items like rights or patents.

Conditional Sales Contract

A type of contract in which the sale itself is contingent on approval; can be either a sale-on-approval contract or a sale-or-return contract.

Lease Contracts

Agreements in which one party (the lessor) grants another party (the lessee) the right to use property, equipment, or facilities for a specified time in exchange for payment.

Sale-Or-Return Contract

A contract in which the buyer and seller agree that the buyer may return the goods at a later time.