When Polygons or Histograms Are Constructed,which Axis Must Show the True

question 60

Multiple Choice

When polygons or histograms are constructed,which axis must show the true zero or 'origin'?

• A) The vertical axis.
• B) The horizontal axis.
• C) Both the horizontal and vertical axes.
• D) Neither the horizontal nor the vertical axis.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) in a balance sheet is represented as a proportion of the total account.

Common Size Analysis

A financial analysis technique that expresses each line item on a financial statement as a percentage of a base amount for easy comparison across periods or companies.

Trend Analysis

The practice of collecting information and attempting to spot a pattern or trend in the data, often used in financial analysis.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.