A. economic resources to be used or turned into cash within one year. b. reports assets, liabilities, and stockholders' equity. c. decrease assets; increase liabilities and stockholders' equity. d. increase assets; decrease liabilities and stockholders' equity. e. an exchange or event that has a direct and measurable financial effect. f. accounts for a business separate from its owners. g. the principle that assets should be recorded at their original cost to the company. h. a standardized format used to accumulate data about each item reported on financial statements. i. the basic accounting equation. j. the two equalities in accounting that aid in providing accuracy. k. the account credited when money is borrowed from a bank using a promissory note. l. cumulative earnings of a company that have not yet been distributed to the owners. m. every transaction has at least two effects. n. amounts presently owed by the business. transaction, separate entity assumption, balance sheet, liabilities, assets, current assets, notes payable, duality of effects, retained earnings, debit.
The vertical analisys shows the different components of a finalcial statement related to a total figure in the statement.
Expresses each financial statement item as a percent of a base amount.
Commonly applied to the balance sheet and the income statement. On the balance sheet, set total assets to 100. On the income statement, set net sales to 100. The resulting statement, expressed entirely in percentages is called a common-size statement.
The total figure in the statement set to equal to 100. Each component´s percentage of that total is computed.
Usefull for comparing. The important of specific components in the operation of a business. Changes in the components from one year to the next.
The correct answer is D. In terms of a percent of a base amount.
As the objective of the vertical analysis is to determine how much each account of the asset represents within the total of the asset, the account to be determined must be divided by the total of the asset and then proceed to multiply by 100. If the total of the asset It is 200 and the available is 20, so we have (20/200) * 100 = 10%, that is, the available represents 10% of the total assets.
It can be said, for example, that the available (cash and banks) should not be very representative, since it is not profitable to have a large amount of cash in the cash or in the bank where it is not generating any profitability. Every company should try not to have more cash than is strictly necessary, with the exception of financial institutions, which due to their corporate purpose must necessarily conserve significant cash resources.