All of the following are true of a financial statement analysis report, except:
A. Accounting standards determine which ratios are relevant and useful for the analysis.
B. Background on the company, its industry, and the economy is part of the analysis overview.
C. Evidential matter includes ratios, trends, comparisons and all analytical measures.
D. The executive summary provides a brief analysis of results.
E. The analysis overview includes background on the company, its industry, and the economy.
Answer: A
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Management representation letters Describe the purpose of the management representation letter
Answer the following statements true (T) or false (F)
1. A trend analysis would be used if an analyst wants to see how the gross profit of a company has changed from one year to the next. 2. A horizontal analysis would be used if an analyst wants to see how the assets of a company have changed from one year to the next. 3. A vertical analysis of a financial statement reveals the relationship of each statement item to its base amount, which is the 100% figure. 4. A vertical analysis percent is computed by dividing the base amount by the specific item and then multiplying by 100. 5. In a vertical analysis of the income statement, each line item is shown as a percentage of net sales revenue.
Transfer pricing
A) is a concept readily accepted by managers of divisions, because it relies on concepts used in cost-based pricing methods. B) incorporates procedures that allow for ease in determining the amount of profit associated with each division of a decentralized company. C) involves determining the cost and profit if the output of one division is transferred to another division of the same company. D) is not used by many companies because it is difficult to eliminate intercompany profits.
Contrast Paul Lawrence’s human needs classification with Maslow’s hierarchy of needs.
What will be an ideal response?