Please Refer to the Partial Balance Sheet Data Provided Below

question 45

Multiple Choice

Please refer to the partial balance sheet data provided below:

Which of the following would be a valid conclusion from the above data?

• A) Shareholders' equity, as a percentage of total liabilities and shareholders' equity, declined over a two year period.
• B) Shareholders' equity declined to 76.6% of net sales in 2017.
• C) Shareholders' equity was up 76.6% over a two year period.
• D) Shareholders' equity was equal to 76.6% of total liabilities in 2017.

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Definitions:

Future Income Tax Rates

Future income tax rates refer to the expected rates at which earnings will be taxed in future periods, relevant for future tax planning and deferred tax calculations.

Deferred Tax Balances

Amounts recorded on the balance sheet to reflect the future tax impact of temporary differences between the accounting and tax treatment of transactions.

Deferred Tax Asset Valuation Allowance

A reserve established against a deferred tax asset when it is likely that some or all of the asset will not be utilized.

Valuation Allowance

An accounting provision made to offset a portion of the deferred tax assets if it's more likely than not that some portion or all of the asset may not be realized.