Which of the following is used to determine how the sales revenue of a company has changed from one year to the next?
A) vertical analysis of the balance sheet
B) horizontal analysis of the income statement
C) horizontal analysis of the balance sheet
D) vertical analysis of the income statement

Question

Quizplus · Accepted Answer

Horizontal analysis of the income statement compares the sales revenue (and other components of the income statement) from one year to the next, making it the best choice for determining changes in sales revenue over time. Vertical analysis of the income statement shows the percentages of each item in relation to total revenue, but does not directly compare changes over time. Vertical and horizontal analysis of the balance sheet are used to analyze the composition and changes of assets, liabilities and equity, but are not specifically related to sales revenue.

Which of the Following Is Used to Determine How the Sales