Foundations of Accounting for Peregrine Global Services Exam Questions and Verified Answers| 100% Correct| Grade A+

Financial statements - provide information that is useful for making investments and other economic decisions about business Horizontal analysis - Analysis of percentage increases and decreases in financial statements across time. The amount of each line item on the most recent statement is compared with the related item on earlier statements, and expressed as a percentage change Vertical analysis - An percentage analysis that is used to show the relationship of each component to the total within a single statement. The balance sheet is analyzed by stating each asset item as a percent of total assets. Each liability and stockholders equity item is stated as a percent of total liabilities and stockholders equity. Common side statements - Horizontal and vertical analyses are useful in assessing trends, in relationships and financial conditions, and operations of a business Common size income statements - can compare to businesses or more Solvency and profitability - The ability of a business to repay its debts and earn income Solvency analysis - Focuses on the ability of a business to pay, or otherwise satisfy its current and noncurrent liabilities Current position analysis, working capital - Using metrics to assess a business, is ability to pay its current liabilities Current ratio - current assets divided by current liabilities