Which of the Following Statements Is Characteristic of Horizontal Analysis

question 168

Multiple Choice

Which of the following statements is characteristic of horizontal analysis?

• A) It can only be used with balance sheet accounts.
• B) It can only be used with income statement accounts.
• C) It expresses each financial statement line item as a percentage of the largest amount on the statement.
• D) It expresses each financial statement line item as a percentage of an earlier year amount.

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Definitions:

Period Cost

Expenses that are not directly tied to production and are therefore expensed in the period they are incurred.

Holiday Party

A social gathering organized to celebrate a holiday or festive season, often involving recreational activities, food, and entertainment.

Administrative Expense

Expenses that are not directly tied to the production or selling of goods and services, such as salaries of senior executives and costs of general services.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.