If the assets shown on a balance sheet are subjected to vertical analysis (using total assets as the base),an increase in the figure for non-current assets from 40% to 55% would always mean that:
A) total non-current assets have increased as a percentage of total assets
B) the dollar amount of current assets has decreased
C) total current assets have decreased as a percentage of total assets
D) total non-current assets have increased as a percentage of total assets and total current assets have decreased as a percentage of total assets

Question

Quizplus · Accepted Answer

Vertical analysis shows the relationship of each item on the balance sheet to a base amount, usually total assets. An increase in the figure for non-current assets from 40% to 55% means that non-current assets have increased as a percentage of total assets. Since total assets are the sum of current assets and non-current assets, this also means that current assets have decreased as a percentage of total assets.

If the Assets Shown on a Balance Sheet Are Subjected