Horizontal analysis compares the balance sheet in a given year to the income statement and statement of cash flows in that same year to ensure that these three statements contain consistent information.

Question

Quizplus · Accepted Answer

Horizontal analysis compares financial data from different periods of time, typically analyzing changes in financial data over a series of years, rather than comparing balance sheets, income statements, and cash flow statements from the same year. Therefore, the statement in the question is incorrect.

Horizontal Analysis Compares the Balance Sheet in a Given Year