Questions from Intermediate Accounting

Q: Do auditors use financial statement analysis techniques? Explain.

Do auditors use financial statement analysis techniques? Explain.

Q: What are comparative financial statements and why are they useful?

What are comparative financial statements and why are they useful?

Q: What is the difference between vertical and horizontal analysis?

What is the difference between vertical and horizontal analysis?

Q: Complete the following vertical analyses of Dragonfly Corporation’s income statement. What

Complete the following vertical analyses of Dragonfly Corporation’s income statement. What line item is the largest percent of sales in 2019? How has it changed from 2018 to 2019?

Q: What defines a company’s profitability?

What defines a company’s profitability?

Q: Explain the difference between return on equity and return on assets.

Explain the difference between return on equity and return on assets.

Q: How is a company’s profit margin calculated?

How is a company’s profit margin calculated?

Q: Where do auditors include their report on the effectiveness of a firm’s

Where do auditors include their report on the effectiveness of a firm’s internal controls? Explain.

Q: What is management’s responsibility for the financial statements?

What is management’s responsibility for the financial statements?

Q: What information is included in the annual report letter written by managers

What information is included in the annual report letter written by managers of publicly traded companies?