Horizontal Analysis Is Analysis in Which

question 27

Multiple Choice

Horizontal analysis is analysis in which:

• A) financial statement lines are expressed as a percent of the base (earliest) year.
• B) all items are presented as a percentage of one selected item on the financial statement.
• C) a statistic is calculated for the relationship between two items on a single financial statement or for two items on different financial statements.
• D) ratios are presented for the past two accounting periods.

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Definitions:

Trade Deficit

The amount by which the value of a nation’s imports exceed the value of its exports.

International Payments

Transactions between countries involving the transfer of money and payments for goods and services across borders.

Merchandise Exports

Goods produced domestically and sold to buyers in another country.

Freely Floating Exchange Rates

A system where the value of currencies is determined by supply and demand in the foreign exchange market without direct intervention by central banks.