Question

1. Comparing an income statement ratio like net profit margin against industry rivals would be an example of:

1. Cross-sectional analysis.
2. Common-size analysis.
3. Time-series analysis.

2. Which of the following is least likely to be classified as other comprehensive income under U.S. GAAP?

1. Changes in the value of long-lived assets that are measured using the revaluation model
2. Unrealized holding gains and losses on available-for-sale securities
3. Minimum pension liability adjustments

3. A company’s other comprehensive income most likely includes:

1. Unrealized gains and losses from cash flow hedging derivatives.
2. Dividends paid.
3. Net income.

Answer 1

Comparing an income statement ratio like net profit margin against industry rivals would be an example of:

a. Cross sectional analysis

Explaination:

Cross-sectional analysis is a type of analysis where an investor, analyst or portfolio manager compares financial information including income statement ration of a particular company to its industry peers

Which of the following is least likely to be classified as other comprehensive income under U.S. GAAP?

b. Minimum pension liability adjustments

A company’s other comprehensive income most likely includes:

a. Unrealized gains and losses from cash flow hedging derivatives.

Explaination: In business accounting, other comprehensive income (OCI) includes revenues, expenses, gains, and losses that have yet to be realized (unrealised)