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:

Tax Loss Carryforward

A tax provision that allows a company to use its current loss towards future profits to reduce taxable income.

Taxable Income

The amount of income subject to taxation, after all deductions and allowances have been considered, according to the tax laws.

Reportable Segments

Portions of a business that can be separately identified by products and services or by geographical areas, providing relevant information to evaluate its financial statements.

Segmented Information

Segmented information refers to the breakdown of a company's financial reports into segments or divisions, allowing for a detailed analysis of each part of the business.