Component Percentages Indicate the Relative Size of Each Item Included

question 101

Multiple Choice

Component percentages indicate the relative size of each item included in a total. Which of the following statements is true?

• A) Income statement items are expressed as a percentage of net income, while balance sheet items are expressed as a percentage of total assets.
• B) Income statement items are expressed as a percentage of net sales, while balance sheet items are expressed as a percentage of total assets.
• C) Income statement items are expressed as a percentage of net income, while balance sheet items are expressed as a percentage of net worth.
• D) Both income statement and balance sheet items are expressed as a percentage of net worth.

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Definitions:

Stakeholders

The groups of people affected by a firm’s decisions.

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives, often involving judgment, evaluation, and reasoning.

Consequentialism

A general approach to ethical dilemmas which requires that we consider the consequences our actions will have on relevant people.

Rigid Set

In mathematics, a set whose members adhere to strict criteria or definitions, often used in contrast to more flexible or loosely defined collections.