A Firm Uses 2011 as the Base Year for Its

question 44

Multiple Choice

A firm uses 2011 as the base year for its financial statements.The common-size,base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

• A)2011 inventory
• B)2011 total assets
• C)2012 total assets
• D)2011 inventory expressed as a percent of 2011 total assets
• E)2012 inventory expressed as a percent of 2012 total assets

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Definitions:

Net Fixed Assets

The value of a company's fixed assets minus any accumulated depreciation or impairment charges, reflecting the actual value of assets in use.

Intangible Fixed Assets

Non-physical assets owned by a company that are used in operations, such as intellectual property, goodwill, and licenses.

Statement of Financial Position

A financial statement that presents the assets, liabilities, and shareholders' equity of a company at a specific point in time, commonly referred to as a balance sheet.

Income Statement

A financial statement that provides a summary of a company's revenues, expenses, and profits/losses over a period of time.