Which of the Following Statements Regarding a Horizontal Analysis Is

question 71

Multiple Choice

Which of the following statements regarding a horizontal analysis is false?

• A) A horizontal analysis is used to compare an item in a current statement with the same item in prior statements.
• B) A horizontal analysis can be performed on a balance sheet and income statement, but not on a statement of cash flows.
• C) If Fees Earned in Year 1 is $125,000 and Fees Earned in Year 2 is $143,750, a horizontal analysis will indicate a 15% increase over this period.
• D) When two statements are compared in horizontal analysis, the earlier statement is used as the base for computing the amount and the percent of change.

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Definitions:

FICA - Social Security

A U.S. federal program funded by payroll taxes under the Federal Insurance Contributions Act (FICA) aimed at providing retirement, disability, and survivors' benefits.

Withheld

Referring to the portion of an employee's wages not paid directly to the employee but instead held back, often for tax purposes.

Matched by Employer

Refers to contributions that an employer makes to an employee's retirement plan, equal to the amount the employee contributes up to a certain percentage.

Installment Note

A loan that requires regular payments, or installments, over a set period of time, until the principal and interest are paid in full.