Solved

Match Each Item with Its Definition

Question 186

Matching

Match each item with its definition.

Premises:

Responses:

Horizontal analysis

Useful for comparing one company to another or a company with industry averages

Something that is both unusual and infrequent.

Occurs when a company abandons a segment.

Focuses on a company’s ability to generate net income

A percentage analysis of increases and decreases in related items in comparative financial statements.

An analysis of a company’s ability to pay its current liabilities.

This requires a restatement of prior period financial statements.

The percentage analysis of the relationship of each component in a financial statement to a total within the statement.

Premises:

Horizontal analysis

Responses:

Useful for comparing one company to another or a company with industry averages

Something that is both unusual and infrequent.

Occurs when a company abandons a segment.

Focuses on a company’s ability to generate net income

A percentage analysis of increases and decreases in related items in comparative financial statements.

An analysis of a company’s ability to pay its current liabilities.

This requires a restatement of prior period financial statements.

The percentage analysis of the relationship of each component in a financial statement to a total within the statement.

Correct Answer:

Premises:

Responses:

Useful for comparing one company to another or a company with industry averages

Something that is both unusual and infrequent.

Occurs when a company abandons a segment.

Focuses on a company’s ability to generate net income

A percentage analysis of increases and decreases in related items in comparative financial statements.

An analysis of a company’s ability to pay its current liabilities.

This requires a restatement of prior period financial statements.

The percentage analysis of the relationship of each component in a financial statement to a total within the statement.

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