All of the Following Statements Regarding a Horizontal Analysis Are

question 90

Multiple Choice

All of the following statements regarding a horizontal analysis are true except:

• A) A horizontal analysis is used to compare an item in a current statement with the same item in prior statements.
• B) A horizontal analysis can be performed on a balance sheet and income statement, but not on a statement of cash flows.
• C) If Fees Earned in 2013 is $125,000 and Fees Earned in 2014 is $143,750, a horizontal analysis will indicate a 15% increase over this period.
• D) When two statement are compared in horizontal analysis, the earlier statement is used as the base for computing the amount and the percent of change.

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Definitions:

Income

The financial gain received by an individual or a business in exchange for providing a good or service or through investing capital.

Price

The amount of money required to purchase a good or service, determined by factors such as demand, supply, and production cost.

Law Of Demand

The claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises

Price

The monetary value assigned to a product or service, determined by various factors including supply and demand, production cost, and market competition.