Which One of the Following Is TRUE

question 11

Multiple Choice

Which one of the following is TRUE?

• A) Stand-alone ratios do not provide much information about the company.
• B) Ratios are comparative measures over time or across firms.
• C) Ratios are forward-looking measures.
• D) Analyzing historical ratios is not useful.

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Definitions:

Subsidiary Ledger

A detailed ledger that provides a breakdown of information summarized in a controlling account in the general ledger.

Control Account

An account used in the general ledger to summarize the details of transactions recorded in subsidiary ledgers.

Subsidiary Ledger

A detailed ledger containing all the individual accounts related to a particular area, such as accounts receivable or accounts payable, which supports the totals recorded in the general ledger.

Control Account

A summary account in the general ledger that aggregates the details recorded in a subsidiary ledger for similar transactions, such as accounts receivable or payable.