Which of the following statements regarding the analysis of absolute amounts of various accounts reported on the financial statements is not true?
A)Financial statement users with expertise in particular industries can look at absolute amounts and assess a company's performance in a certain area.
B)To correctly evaluate an absolute amount,the analyst must consider its relative importance.
C)Economic statistics such as the gross national product are built upon totals of absolute amounts reported by businesses.
D)Using absolute amounts eliminates the problem of varying materiality levels.

Question

Quizplus · Accepted Answer

Comparing only absolute amounts has drawbacks because materiality levels differ from company to company or even from year to year for a given company.

Which of the Following Statements Regarding the Analysis of Absolute