What Is the Difficulty in Using Horizontal, Vertical, or Ratio

question 3

Multiple Choice

What is the difficulty in using horizontal, vertical, or ratio analysis?

• A) The complicated calculations required to arrive at change statements
• B) Identifying the changes and speed of changes in the ratios, when the change is unexpected or unexplained
• C) Knowing when a change in account balance or relationship is significant enough to signal possible fraud
• D) Assessing the magnitude or significance of changes in account balances looking only at raw financial statement numbers

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Definitions:

Electronic Funds Transfers

A system that allows the transfer of money between accounts via electronic signals, removing the need for physical exchanges.

Cash Disbursements

Outflows of cash for expenses, or payments made by a business during a specific period, such as paying suppliers, employees, or other expenditures.

Financial Statements

Consolidated documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.