Which of the following statements is true regarding horizontal analysis?
A)Horizontal analysis can only be used with balance sheet accounts.
B)Horizontal analysis can only be used with income statement accounts.
C)Horizontal analysis can only be used with retained earnings accounts.
D)Time series analysis is an advanced statistical technique for horizontal analysis.

Question

Quizplus · Accepted Answer

Horizontal analysis, also known as trend analysis, is applicable to both balance sheet and income statement accounts, making statements A, B, and C incorrect. It involves comparing financial data over multiple periods to identify trends and growth patterns. Time series analysis is indeed a more advanced statistical technique that can be used within the context of horizontal analysis to analyze data points collected or recorded at specific intervals over a period of time.

Which of the Following Statements Is True Regarding Horizontal Analysis