The Dollar Change for a Financial Statement Item Is Calculated

question 34

Multiple Choice

The dollar change for a financial statement item is calculated by:

• A) Subtracting the analysis period amount from the base period amount.
• B) Subtracting the base period amount from the analysis period amount.
• C) Subtracting the analysis period amount from the base period amount, dividing the result by the base period amount, then multiplying that amount by 100.
• D) Subtracting the base period amount from the analysis period amount, dividing the result by the base period amount, then multiplying that amount by 100.
• E) Subtracting the base period amount from the analysis amount, then dividing the result by the base amount.

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Definitions:

Business Entity Principle

An accounting concept that treats a business as separate and distinct from its owners for purposes of recording financial transactions.

Monetary Unit Principle

An accounting principle that assumes business transactions or events can be measured and expressed in monetary units.

Generally Accepted Accounting Principles

A set of widely adhered to accounting principles and norms for the preparation of financial statements.

Time Period Assumption

An accounting principle that states a business's activities can be divided into specific time periods, such as months, quarters, or years for reporting purposes.