121.Indicate whether each of the following statements about financial statement analysis is true or false.The reason behind a financial statement ratio or percentage analysis result is usually self...

121.Indicate whether each of the following statements about financial statement analysis is true or false.


The reason behind a financial statement ratio or percentage analysis result is usually self evident and does not require further study or analysis.
In horizontal percentage analysis, an item from the financial statements is expressed as a percentage of the same item from a previous year's financial statements.
Horizontal analysis for several years can be done by choosing one year as a base year and calculating increases or decreases in relation to that year.
One form of horizontal analysis is the preparation of common size financial statements.
Vertical analysis compares two or more financial statement items within the same time period.

122.Indicate whether each of the following statements about financial statement analysis is true or false.


Vertical analysis of a company's balance sheet is useful in assessing its liquidity.
Common size financial statements are a form of vertical analysis, but the common size statements for two or more years may usefully be compared.
Vertical analysis of a balance sheet involves converting each component to a percentage of stockholders' equity.
Small percentage changes resulting from vertical analysis may still represent large dollar amounts; therefore, changes in both absolute dollar amounts and percentages should be examined.
A common size income statement is prepared by converting each component to a percentage of net income.