Indicate Whether Each of the Following Statements About Financial Statement

question 96

Short Answer

Indicate whether each of the following statements about financial statement analysis is true or false.
_____ a) Comparing percentages derived from financial statement analysis has the drawback of varying materiality levels.
_____ b) The materiality of accounting information refers to whether it is viewed as favorable (good news) or unfavorable (bad news).
_____ c) Companies must account for immaterial items in compliance with generally accepted accounting principles.
_____ d) To judge the materiality of an absolute financial statement amount, one must consider the size of the company reporting it.
_____ e) Meaningful comparisons between two companies generally should be made using percentage analysis or ratio analysis, not absolute amounts.