If the comparative balance sheet shows the amount and percentage of decrease in merchandise inventory from 2012 to 2013, the firm used
A) vertical analysis.
B) horizontal analysis.
C) common-size analysis.
D) trend analysis.

Question

Quizplus · Accepted Answer

Comparative balance sheet compares the balances of two or more periods. In this case, the decrease in merchandise inventory is being compared between two periods (2012 and 2013), which falls under horizontal analysis. Vertical analysis shows each item on a financial statement as a percentage of a base amount, common-size analysis is another name for vertical analysis, and trend analysis involves analyzing data over a longer period of time to identify trends.

If the Comparative Balance Sheet Shows the Amount and Percentage