Which of the Following Is NOT True of Common-Size Balance

question 94

Multiple Choice

Which of the following is NOT true of common-size balance sheets?

• A) Each asset and liability item on the balance sheet is standardized by dividing it by total assets.
• B) Balance sheet accounts are represented as percentages of total assets.
• C) Each asset and liability item on the balance sheet is standardized by dividing it by sales.
• D) Common-size balance sheets allow us to make meaningful comparisons between the balance sheets of two firms that are different in size.

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Definitions:

Vulnerabilities

Weaknesses in a system or security setup that can be exploited by threats.

Customer's Note

It is a formal promissory note or debt instrument where the customer promises to pay a specific sum of money to the issuer, often used in business as a form of short-term financing.

Bank Statement Adjustment

The process of amending the balance in a company's record of its bank account to match the balance reported on the bank statement, often involving adding or subtracting items like checks or bank charges.

Outstanding Checks

Checks that have been issued and recorded in an entity's accounting system but have not yet been cashed or cleared by the bank.