Comparing Changes in Net Income for One Company Over Time

question 58

Multiple Choice

Comparing changes in net income for one company over time is an example of:

• A)Vertical analysis.
• B)Horizontal analysis.
• C)Diagonal analysis.
• D)Both vertical and horizontal analysis.

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Definitions:

Accounts Receivable

Amounts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Direct Method

A financial accounting method that allocates service department costs directly to producing departments without intermediate allocations.

Sales Revenue

The overall sum of money made from selling products or services before deducting any costs.

Direct Method

A cash flow statement preparation approach that enumerates major classes of gross cash receipts and payments.