Which of the Following Statements Regarding Horizontal Analysis Is Not

question 12

Multiple Choice

Which of the following statements regarding horizontal analysis is not true?

• A)Percentage analysis involves computing the percentage relationship between two amounts.
• B)A horizontal analysis of cost of goods sold on the income statement includes dividing gross margin by total revenue.
• C)Horizontal analysis attempts to eliminate the materiality problem of comparing firms of different sizes.
• D)In horizontal percentage analysis, a financial statement line item is expressed as a percentage of the previous balance of the same item.

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