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

Question

Quizplus · Accepted Answer

Horizontal analysis compares financial information from one period to another period. In this case, the focus is on how sales revenue has changed from one year to the next. The income statement is the financial statement that shows the revenue and expenses of a company, making it the best choice for horizontal analysis. Vertical analysis, on the other hand, compares different items on the same financial statement, while balance sheets show the financial position of a company at a given point in time, making them less relevant for analyzing changes over time.

Which of the Following Types of Financial Statement Analysis Would