Common Size Financial Statements Convert Figures to a Common Size

question 18

Multiple Choice

Common size financial statements convert figures to a common size by:

• A) dividing balance sheet items by total assets and income statement items by net income.
• B) dividing balance sheet items by net sales and income statement items by net income.
• C) dividing balance sheet items by total assets and income statement items by net sales.
• D) dividing balance sheet items by net sales and income statement items by total assets.
• E) dividing balance sheet items by total equity and income statement items by net sales.

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Definitions:

Escalation of Commitment

Is a pattern of behavior in which an individual or group continues to invest in a decision despite evidence of its ineffectiveness or the likelihood of negative outcomes.

Perceptual Defense

The psychological mechanism by which individuals protect themselves from information or stimuli perceived as threatening.

Decision Maker

An individual or group responsible for making choices that will impact the organization.

Visuals

Graphic elements such as charts, graphs, and images used in communication materials to supplement text, making information easier to understand and more engaging.