Select the Incorrect Statement Regarding the Analysis of Absolute Amounts

question 4

Multiple Choice

Select the incorrect statement regarding the analysis of absolute amounts of various accounts reported on the financial statements.

• A)Using absolute amounts eliminates the problem of varying materiality levels.
• B)To fully appreciate an absolute amount, the analyst must consider the size of other accounts of the business.
• C)Economic statistics such as the gross national product are built upon totals of absolute amounts reported by businesses.
• D)Financial statement users with expertise in particular industries can look at absolute amounts and assess a company's performance in a certain area.

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Definitions:

Secondary Circular Reactions

The stage in Piaget's theory of cognitive development, occurring from about 4 to 8 months, where infants repeat actions that produce effects on the environment, showing early intentionality.

Goal

A desired result or outcome that an individual or system aims to achieve through a process of planning and effort.

Environment

The surrounding conditions and factors that affect living organisms, including natural elements and human-made influences.

Tertiary Circular Reactions

A stage in Piaget's theory of development where infants (12-18 months) experiment with new behaviors to see the outcomes, indicating the beginning of intentional actions.