Ratios that compare an income statement account with a balance sheet account should express the balance sheet account as an average of the beginning and ending balances.

Question

Quizplus · Accepted Answer

Ratios that compare income statement accounts with balance sheet accounts should express the balance sheet account as an average of the beginning and ending balances. This is done to provide a more accurate representation of the account over the period being analyzed.

Ratios That Compare an Income Statement Account with a Balance