Chapter 17—Financial Statement Analysis

TRUE/FALSE

6. A financial statement showing each item on the statement as a percentage

of one key item on the statement is called common-sized financial
statements.

ANS: T PTS: 1 DIF: Easy OBJ: 17-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis

7. The relationship of each asset item as a percent of total assets is an

example of vertical analysis.

ANS: T PTS: 1 DIF: Easy OBJ: 17-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis

8. Vertical analysis refers to comparing the financial statements of a single

company for several years.

ANS: F PTS: 1 DIF: Easy OBJ: 17-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis

9. In a common-sized income statement, each item is expressed as a

percentage of net income.

ANS: F PTS: 1 DIF: Easy OBJ: 17-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-
23-Financial Statement Analysis