Which of these is correct in matching decisions with information in financial reports?
A) Profitability - balance sheet
B) Solvency - income statement
C) Return on investment - income statement and balance sheet
D) Long-term borrowing - statement of changes in equity

Question

Quizplus · Accepted Answer

Return on investment is a measure that can be calculated by information found in both the income statement and balance sheet. Profitability relates to income, and therefore, is more closely associated with the income statement. Solvency refers to a company's ability to meet its long-term financial obligations, making it more closely associated with the balance sheet. Long-term borrowing would be found in the notes to the financial statements or in the statement of financial position, not the statement of changes in equity.

Which of These Is Correct in Matching Decisions with Information