Indicate Whether Each of the Following Statements About Financial Statement

question 142

Short Answer

Indicate whether each of the following statements about financial statement analysis is true or false.
Meaningful comparisons between two companies generally should be made using percentage analysis or ratio analysis,not absolute amounts.______
The materiality of accounting information refers to whether it is viewed as favorable (good news)or unfavorable (bad news).______
Companies must account for immaterial items in compliance with generally accepted accounting principles.______
To judge the materiality of an absolute financial statement amount,one must consider the size of the company reporting it.______
Comparing percentages derived from financial statement analysis has the drawback of varying materiality levels.______

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Definitions:

Schachter Two-factor Theory

A psychological theory which proposes that emotions are comprised of two factors: physiological arousal and cognitive label.

Common Sense Theory

An approach suggesting that people naturally form theories about their experiences and the world around them, based on everyday observations and practical reasoning.

Autonomic Arousal

The activation of the autonomic nervous system, which regulates involuntary body functions and is often associated with stress or excitement.

James-Lange Theory

A hypothesis suggesting that emotions are the result of physiological responses to external stimuli followed by identification of the emotion based on the physical response.