If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2016 to 2017,the firm used
A) vertical analysis.
B) horizontal analysis.
C) common-size analysis.
D) trend analysis.

Question

Quizplus · Accepted Answer

Horizontal analysis compares the changes in amounts or percentages from one period to another, such as from 2016 to 2017. Vertical analysis shows the relative proportion of each item to a base item, such as calculating the percentage of merchandise inventory to total assets. Common-size analysis is a type of vertical analysis that compares each item to a common base, such as expressing all items as a percentage of sales. Trend analysis looks at the changes in data over a longer period of time to identify patterns or trends.

If the Comparative Balance Sheet Shows the Amount and Percentage