3/ Consider the following income statement data for Barolo Inc.:
2020 | 2019 | ||
Sales revenue | $97,300 | $86,200 | |
Less: Cost of goods sold | 45,600 | 53,400 | |
Gross profit | 51,700 | 32,800 | |
Less: Selling and administration costs | 22,500 | 18,300 | |
Net Income |
$29,200 |
$14,500 |
The common-size percentage for selling and administration costs in 2020 was
a/ 21.2%.
b/ 23.1%.
c/ 43.5%.
d/ 77.0%.
4/ Why is the audit report important in the analysis of a company?
a/ It guarantees the accuracy of the information in the financial statements.
b/ It guarantees the accuracy of the internal controls of the company.
c/ The auditors are hired by management to assess the appropriateness of the accounting policies chosen.
d/ The auditors are an independent third party expressing an opinion on the fairness of the financial statements.
Common-size statements are financial statements showing only percentages and no absolute dollar amounts. Both numbers on a balance sheet of the standard type are percentages of the total assets, and all items included in a income statement are percentages of net sales. The lateral review of a company's financial reporting is enabled by using common-size reports.
Common size percentage: (Selling and distribution costs / Sales Revenue ) *100
= (22500/97300) * 100
= 23.1%
2. Option D is correct
Because the auditors are indipendent third parties expressing an opinion on the fairness of the financial statements.
An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern.
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3/ Consider the following income statement data for Barolo Inc.: 2020 2019 Sales revenue $97,300 $86,200 Less:...
1/ Analysts use financial statements for their analysis for all of the following reasons except a/ corporate performance. b/ employee satisfaction. c/ lending decisions. d/ risks related to the investment. 2/ Consider the following income statement data for Barolo Inc.: 2020 2019 Sales revenue $97,300 $86,200 Less: Cost of goods sold 45,600 53,400 Gross profit 51,700 32,800 Less: Selling and administration costs 22,500 18,300 Net Income $29,200 $14,500 Based on common-size analysis, which of the following statements is correct? a/...