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.

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Definitions:

Production Alternative C

A specific choice or option in the array of possible production strategies or methods, typically designated in a scenario or case study.

Growth Rate

The proportional increase of some variable within a specific time period, often expressed as a percentage.

Law of Increasing Opportunity Costs

States that as production of a product increases, the cost to produce an additional unit of that product also increases. This is due to resources typically not being equally efficient in producing every good.

Consumer Goods

Products that are purchased for consumption by the average consumer, typically divided into durable goods, nondurable goods, and services.