The Principal Reason for Preparing Common-Size Statements Is [Blank]

question 109

Multiple Choice

The principal reason for preparing common-size statements is [blank].

• A)to make meaningful comparisons between firms that are not the same size
• B)to make meaningful comparisons between different quarters within the fiscal year
• C)to eliminate the effects of inflation
• D)to make meaningful comparisons between firms in different industries

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Definitions:

Wheeler-Lea Act

The Wheeler-Lea Act is a United States federal law that amended the Federal Trade Commission Act, prohibiting unfair or deceptive acts or practices in commerce, with a particular focus on false advertising.

Federal Trade Commission

A U.S. government agency responsible for protecting consumers and promoting competition by preventing anticompetitive, deceptive, and unfair business practices.

Purchasing Power

The ability of an individual or group to buy goods or services, often relative to the amount of money they have.

Deflation

A decrease in the general price level of goods and services, often indicating reduced consumer demand or increased supply.