Each of the Following Statements Is Justified by a Concept

question 10

Essay

Each of the following statements is justified by a concept or convention of accounting.Write the letter in the blank next to each statement corresponding to the concept or convention involved.
_____ 1.This convention best enhances comparability of financial statements between years.
_____ 2.A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.
_____ 3.A company forgoes hiring another full-time accountant,which would add only slightly to the financial statements' accuracy.
_____ 4.A company uses lower-of-cost-or-market to value inventory.
_____ 5.A large company rounds its financial statement figures to the nearest $10,000.

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Definitions:

Standards For Comparisons

Established criteria used to measure and evaluate the performance, quality, or value of something.

Financial Analysis

The process of examining financial statements to make decisions about investments, credit, and the financial health of an entity.

Common-Size Percentages

Financial analysis tool that expresses each line item on a financial statement as a percentage of a base amount, facilitating comparison across companies or periods.

Income Statement

A report detailing a business's income and expenditures within a certain timeframe, culminating in either a net gain or a deficit.