Comparing the Amount of a Balance Sheet Item in One

question 33

Multiple Choice

Comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called

• A) common-size analysis.
• B) vertical analysis.
• C) horizontal analysis.
• D) trend analysis.

---

Definitions:

Elastic

A characteristic of a good or service whose demand or supply changes significantly when its price changes, indicating sensitivity to price adjustments.

Sunk Costs

Expenses that have been incurred and cannot be recovered, which should not impact future business decisions.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, including high startup costs, legal restrictions, and strong brand identity.

Research and Development

Activities undertaken by companies or organizations to innovate and introduce new products or processes.