How Does Horizontal Analysis of Financial Statements Help Forensic Accountants

question 1

Multiple Choice

How does horizontal analysis of financial statements help forensic accountants in their investigations?

• A) It compares key financial statement items over time to identify changes.
• B) It uses Dupont model to calculate and compare the return on equity.
• C) It helps forensic accountants in identifying fraudulent journal entries.
• D) It allows the comparison of financial statements regardless of firm size.

---

Definitions:

Research Hypothesis

A statement proposing a potential outcome or relationship, to be tested through scientific inquiry and experimentation.

Statistical Analysis

Statistical analysis encompasses the methods and techniques used to process and interpret data to discover patterns, relationships, and trends, often leading to informed decision-making.

T-test

A statistical test used to compare the means of two groups and determine if there are statistically significant differences between them.

Null Hypothesis

A statement used in hypothesis testing that posits there is no statistical significance in a set of given observations, aiming to be either rejected or not rejected.