With ratio analysis,when an item on the statement of cash flows is compared to a balance sheet item:
A) the balance sheet item should first be calculated as an average amount for the year.
B) the ending balance of the balance sheet item should be used.
C) the beginning balance of the balance sheet item should be used.
D) a meaningful comparison of items between these statements cannot be made.

Question

Quizplus · Accepted Answer

When comparing an item on the statement of cash flows to a balance sheet item in ratio analysis, it's more accurate to use the average amount of the balance sheet item for the period. This approach accounts for changes throughout the period and provides a more meaningful comparison.

With Ratio Analysis,when an Item on the Statement of Cash