COMMON SIZED PERCENTAGES are financial statements in which each item is expressed as a percentage of a major financial statement component. In the Income Statement, each "Common Size %" is the field amount expressed as a percent of "Net Revenues." In the Balance Sheet, each "Common Size %" is the amount in the category as a percent of Total Assets. Common sized financial statements can be used to: a. identify key structural changes in a company's financial data over a period of time; b. more easily compare the financial data of firms that vary significantly in size; and, c. compare a company's financial data to industry norms.
HISTORICAL COST ACCOUNTING is an accounting principle requiring all financial statement items to be based on original cost. It is usually based upon the dollar amount originally exchanged in an arms-length transaction; an amount assumed to reflect the fair market value of an item at the transaction date.
AUDIT REPORT is a signed, written document which presents the purpose, scope, and results of the audit. Results of the audit may include findings, conclusions (opinions), and recommendations.
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