David, a financial accountant at a multinational company, is asked to study the comparative financial statements of a prospective partner firm. He uses comparative income statements to determine the changes in the assets and liabilities of the firm and whether the net income of the firm has increased or decreased over the past five years. In this scenario, David is most likely using _____.
A) activity-based costing
B) horizontal analysis
C) a statistical syllogism
D) static analysis

Question

Quizplus · Accepted Answer

David is using horizontal analysis, which involves comparing financial data over multiple periods to identify trends and changes in financial performance, such as changes in net income over the past five years.

David, a Financial Accountant at a Multinational Company, Is Asked