Horizontal Analysis Showed a 25% Increase in Accounts Receivable in 2013

question 100

Multiple Choice

Horizontal analysis showed a 25% increase in accounts receivable in 2013 over 2012. Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period. Given this information, what conclusion(s) may be reached?

• A)The dollar amount of accounts receivable increased.
• B)The dollar amount of accounts receivable decreased.
• C)It cannot be determined if the dollar amount of accounts receivable increased or decreased.
• D)This result is impossible. An error has been made in the calculations.

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Definitions:

Transferring Risk

Transferring risk involves moving potential financial loss from one party to another, commonly through insurance policies or hedging strategies.

Allocating Risk

The process of identifying and distributing the potential financial, operational, or legal hazards among parties in a transaction or agreement.

Contract Law

A branch of law that deals with agreements between parties, their rights, and obligations.

Consideration

In contract law, consideration refers to something of value exchanged between parties that is necessary for a valid contract.