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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