Horizontal Analysis Showed a 25% Increase in Accounts Receivable in 2018

question 27

Multiple Choice

Horizontal analysis showed a 25% increase in accounts receivable in 2018 over 2017. 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:

Budgeted Purchases

Estimated amounts allocated for the acquisition of goods or services during a specific budget period.

Inventory Levels

The quantity of goods and materials a company has in stock at any given time.

Sales Representatives

Individuals who represent a company's products or services and are responsible for extending its market reach by securing sales, clients, or contracts.

Selling Expenses

Costs incurred directly from the selling of products or services, including advertising, commission, and distribution costs.