Horizontal Analysis of Comparative Financial Statements Includes the

question 46

Multiple Choice

Horizontal analysis of comparative financial statements includes the

• A) development of common-size statements.
• B) calculation of dollar amount changes and percentage changes from the previous to the current year.
• C) calculation of the percentage of net sales for each item listed.
• D) calculation of liquidity ratios.

Grasp the concept of forfeited shares and the accounting treatment and implications for reissue.

Understand the regulations and corporate decisions related to dividends and share buy-backs.

Appreciate the importance of equity-related disclosures in financial statements for transparent reporting.

Recognize the effects of currency translation on financial reporting and equity adjustment.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over current liabilities.

Acid Test Ratio

A financial metric that assesses a company's ability to pay off its short-term liabilities with its quick assets (cash, marketable securities, and receivables).

Current Assets

Assets that are expected to be converted into cash within one fiscal year or one operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.