What is a primary drawback with examining and comparing absolute amounts from two businesses' financial statements?
What will be an ideal response?
Answers will vary
The primary drawback is that absolute amounts are affected by the size of a company. A change in absolute amount that would be important for one company might be immaterial (too small to matter) for another company.
You might also like to view...
The data below is for Music Corporation for 2015. Accounts receivable - January 1, 2015 $236,000 Credit sales during 2015 820,000 Collections from credit customers during 2015 590,000 Customer accounts written off as uncollectible during 2015 8,000 Allowance for doubtful accounts - January 1, 2015 8,700 Estimated uncollectible accounts based on an aging analysis 9,600 Refer to the data for Music
Corporation. If the aging approach is used to estimate bad debts, what is the balance in the Allowance for Doubtful Accounts after the bad debt expense adjustment? a. $8,000 b. $8,100 c. $8,900 d. $9,600
How should you identify the title of an article in a newspaper?
a. italic b. bold c. underline d. quotation marks
Your personal code of ethics begins to develop in your childhood
Indicate whether the statement is true or false
A large film production company merges with a popular sound processing studio, resulting in the formation of a new company out of the two previously independent firms. This is most likely an example of a _____.
A. market extension merger B. conglomerate merger C. vertical merger D. horizontal merger