SOFA-CFE · Question #406
A fraction analysis is a means of measuring the relationship between two different financial statement amounts.
The correct answer is B. False. Option B is correct because the statement uses the wrong terminology - the proper term is ratio analysis, not "fraction analysis." Ratio analysis is the established method for measuring the mathematical relationship between two financial statement figures (e.g., current assets…
Question
A fraction analysis is a means of measuring the relationship between two different financial statement amounts.
Options
- ATrue
- BFalse
How the community answered
(54 responses)- A20% (11)
- B80% (43)
Explanation
Option B is correct because the statement uses the wrong terminology - the proper term is ratio analysis, not "fraction analysis." Ratio analysis is the established method for measuring the mathematical relationship between two financial statement figures (e.g., current assets to current liabilities). "Fraction analysis" is not a recognized term in accounting or financial analysis, making the statement false.
Option A is wrong because accepting "fraction analysis" as a valid term would be incorrect - no such standard concept exists in financial reporting or analysis.
Memory tip: Think "Ratio = Real term" - both start with R. If an exam substitutes another word (fraction, portion, percentage analysis) for "ratio analysis," it's likely false.
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