Horizontal analysis showed a 25% increase in accounts receivable in 2013 over 2012. Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period. Given this information, what conclusion(s) may be reached?
A)The dollar amount of accounts receivable increased.
B)The dollar amount of accounts receivable decreased.
C)It cannot be determined if the dollar amount of accounts receivable increased or decreased.
D)This result is impossible. An error has been made in the calculations.

Question

Quizplus · Accepted Answer

The horizontal analysis showed a 25% increase in accounts receivable, indicating that the dollar amount of accounts receivable increased. The vertical analysis showed a decline in the percentage of accounts receivable compared to the total assets, but this does not provide information on the dollar amount.

Horizontal Analysis Showed a 25% Increase in Accounts Receivable in 2013