Select the Incorrect Statement Regarding the Analysis of Absolute Amounts

question 101

Multiple Choice

Select the incorrect statement regarding the analysis of absolute amounts of various accounts reported on the financial statements.

• A) Financial statement users with expertise in particular industries can look at absolute amounts and assess a company's performance in a certain area.
• B) To correctly evaluate an absolute amount, the analyst must consider its relative importance.
• C) Economic statistics such as the gross national product are built upon totals of absolute amounts reported by businesses.
• D) Using absolute amounts eliminates the problem of varying materiality levels.

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Definitions:

Higher Forms

A non-scientific term that has been used historically to refer to more complex life forms or organisms with advanced levels of organization.

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A method of prediction that uses non-numerical data, such as expert opinions or market trends, to make forecasts about future events or behavior.

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Strategic planning carried out by individuals with specialized knowledge and skills in a particular area.

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Identifies alternative courses of action for use if and when circumstances change with time.