Which of the Following Is NOT True of Common Size

question 7

Multiple Choice

Which of the following is NOT true of common size statements?

• A) All balance sheet figures are expressed as a percentage of total assets.
• B) All figures in the income statement are expressed as a percentage of operating profit before tax.
• C) Common size statements enable trends over time for a single company to be detected.
• D) Common size statements assist in comparing companies of different sizes.

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Definitions:

Wage Income

Earnings received by an employee as a result of their employment, typically in the form of a salary or wages.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, representing the rate that applies to each additional dollar of income, important for financial planning and decision-making.

Tax Liability

The total amount of tax owed to the government based on income, asset sales, and other taxable events within a given fiscal period.

Taxable Income

The portion of an individual's or entity's income that is subject to taxation after allowances, exemptions, and deductions.