Which of the following statements is true regarding horizontal analysis?
A)It can only be used with balance sheet accounts.
B)It can only be used with income statement accounts.
C)It expresses each financial statement line item as a percent of the largest amount on the statement.
D)It expresses each financial statement line item as a percent of an earlier year amount.

Question

Quizplus · Accepted Answer

Horizontal analysis expresses each financial statement line item as a percent of an earlier year amount, allowing for the comparison of changes in financial data over time. It can be used for both balance sheets and income statements.

Which of the Following Statements Is True Regarding Horizontal Analysis