If Vertical Analysis,using Total Assets as the Base,shows That Total

question 57

Multiple Choice

If vertical analysis,using total assets as the base,shows that total liabilities have increased from 50% to 63%,this would always mean that:

• A) the dollar amount of liabilities has increased
• B) liabilities have increased as a percentage of total assets
• C) the current ratio has decreased
• D) the dollar amount of owners' equity has decreased

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Definitions:

Faithful Representation

A fundamental qualitative characteristic in financial reporting, ensuring that financial statements are complete, neutral, and free from material error.

Flexibility

The ability of a company or system to adapt to changes or new requirements.

Accounting Information

Financial data and records about an organization's transactions, used for reporting, analysis, and decision-making purposes.

Consistency

In accounting, the principle that requires the same accounting methods to be used from period to period for comparability.