Overall Analysis of Income Statement Accounts May Bring to Light

question 57

Multiple Choice

Overall analysis of income statement accounts may bring to light errors, omissions, and inconsistencies not disclosed in the overall analysis of balance sheet accounts. The income statement analysis can best be accomplished by comparing monthly

• A) Income statement ratios to balance sheet ratios.
• B) Revenue and expense account balances to the monthly reported net income.
• C) Income statement ratios to published industry averages.
• D) Revenue and expense account totals to the corresponding figures of the preceding years.

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Definitions:

Favorable

Conditions or traits that are advantageous for survival and reproduction in a given environment.

Greater Frequency

Refers to the higher rate of occurrence or action, commonly used in the context of events or processes happening more often.

Homologous Structures

Anatomical features in different species that arise from a common ancestor, showing evolutionary relationships despite their possible different functions.

Evolutionary Relationship

The connection and lineage between species or groups of organisms based on their shared genetic heritage and evolutionary history.