Common-Size Financial Statements

question 78

Multiple Choice

Common-size financial statements:

• A) are a specialized application of ratio analysis.
• B) allow us to make meaningful comparisons between the financial statements of two firms that are different in size.
• C) are prepared by having each financial statement item expressed as a percentage of some base number, such as total assets or total revenues.
• D) All of the above are true.

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Definitions:

Tax Payment

The act of paying taxes owed to the government, which can be related to income, property, sales, or other forms of taxation.

Internal Revenue Service

The federal agency responsible for administering and enforcing tax laws in the United States.

Electronic Deposit Requirement

A requirement for businesses to use electronic means to deposit certain types of taxes, including payroll taxes, directly to the IRS or state tax agencies.

Electronic Funds Transfer

An Electronic Funds Transfer (EFT) is the electronic movement of money from one bank account to another, either within a single financial institution or across multiple institutions, through computer-based systems.