Computations and Comparisons of Accounting Ratios Is Possible Because

question 31

Multiple Choice

Computations and comparisons of accounting ratios is possible because:

• A) The zero point in accounting implies "nothingness" in terms of dollar amount.
• B) Accounting measures are on an interval scale.
• C) Assets and liabilities are listed in the order of liquidity in the balance sheet.
• D) Accounting is a basic classification system.

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Definitions:

Investment Contributions

Money that individuals or entities provide toward investment vehicles for the purpose of accumulation and growth.

Compounded Rate

Refers to the process by which interest is earned on both the initial principal and the interest previously earned.

Monthly Payments

Regular payments made once per month, often used in the context of loans, leases, or other financial agreements.

Salary Deferral Plan

A type of retirement plan where employees opt to defer a portion of their salary, which is then invested on a pre-tax basis until withdrawal at retirement.