Comparing Financial Statements of Different Companies and Financial Statements of the Same

question 85

Multiple Choice

Comparing financial statements of different companies and financial statements of the same company across time after controlling for differences in size is called:

• A) liquidity analysis.
• B) vertical analysis.
• C) price-earnings analysis.
• D) horizontal analysis.

---

Definitions:

Debit Balance

A situation where the total debits in an account exceed the total credits. It is commonly found in asset and expense accounts.

Allowance Method

An accounting technique used to estimate and deduct bad debts from accounts receivable based on anticipated losses.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenues.

Written Off

Refers to the accounting action of declaring that a portion of a debt or asset value is considered uncollectable or worthless.