When conducting comparative analysis by reviewing consecutive balance sheets,
A) all items on the balance sheet in Year t must be divided by their corresponding value in Year t-1 and subtract 1.
B) all items on the balance sheet in Year t-1 must be subtracted from their corresponding value in Year t.
C) all items on the balance sheet in Year t must be divided by net income in Year t-1.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

Both A and B are correct methods for conducting comparative analysis. A involves calculating the percentage change, while B involves calculating the absolute change.

When Conducting Comparative Analysis by Reviewing Consecutive Balance Sheets