True / False Questions
88.The only requirement involved in communicating useful information is that the information be accurate.
True False
89.The accounting profession assumes that financial statement users have an expert knowledge of business.
True False
90.A company has an obligation to provide highly detailed information on its financial statements.
True False
91.A vertical analysis uses percentages to compare each of the parts of an individual statement to a key statement figure. For example, on an income statement each item would be shown as a percentage of net sales.
True False
92.Vertical analysis always involves comparing financial statement elements over a span of time.
True False
93.Financial analysis typically involves some form of comparison such as changes in the same item over a number of years.
True False
94.The drawback of studying absolute amounts reported in financial statements is the problem of differing materiality levels.
True False
95.While horizontal analysis examines one item over many time periods, vertical analysis examines many items in the same interval of time.
True False
96.Financial ratio analysis is a form of horizontal analysis in that comparisons are made between different accounts in the same set of financial statements.
True False
97.A banker may perform a financial ratio analysis to assess a firm's ability to repay debt in a timely manner.
True False