Which of the Following Statements Regarding Horizontal Analysis Is Incorrect

question 154

Multiple Choice

Which of the following statements regarding horizontal analysis is incorrect?

• A) Percentage analysis involves establishing the relationship of one amount to another.
• B) A horizontal analysis of cost of goods sold on the income statement includes dividing net income by total revenue.
• C) Percentage analysis attempts to eliminate the materiality problem of comparing firms of different sizes.
• D) In doing horizontal analysis, an account is expressed as a percentage of the previous balance of the same account.

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Definitions:

Do Your Best

A motivational encouragement to strive for the highest level of performance possible.

Productivity

The effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input.

Challenging Goal

An objective that is difficult to achieve but motivates individuals or groups to extend their efforts, skills, and strategies.

Productivity

A measure of the efficiency of a person, machine, system, etc., in converting inputs into useful outputs.