1. A liquidity ratio measures the
a. percentage of total financing provided by creditors.
b. income or operating success of a company over a period of time.
c. short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
d. ability of a company to survive over a long period of time.
2. The convention of consistency refers to consistent use of accounting principles
a. within industries.
b. among firms.
c. among accounting periods.
d. throughout the accounting periods.
3. Horizontal analysis is also known as
a. trend analysis.
b. common size analysis.
c. linear analysis.
d. vertical analysis.
4. Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time
a. that has been arranged from the lowest number to the highest number.
b. to determine the amount and/or percentage increase or decrease that has taken place.
c. that has been arranged from the highest number to the lowest number.
d. to determine which items are in error.
5. Vertical analysis is a technique that expresses each item in a financial statement
a. as a percent of a base amount.
b. in dollars and cents.
c. as a percent of the item in the previous year.
d. starting with the highest value down to the lowest value.