Comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called:
A)common-size analysis.
B)horizontal analysis.
C)vertical analysis.
D)trend analysis.

Question

Quizplus · Accepted Answer

The process of comparing the amount of a balance sheet item in one year to the amount for the same item in a prior year is called horizontal analysis. It is also known as trend analysis or year-over-year analysis. Common-size analysis involves expressing balance sheet items as a percentage of a base item, while vertical analysis involves expressing each balance sheet item as a percentage of total assets.

Comparing the Amount of a Balance Sheet Item in One