Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Horizontal Analysis

Financial Accounting

14. Financial Statement Analysis

Horizontal Analysis

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Multiple Choice

The comparison of a company's financial condition and performance to a base amount is known as:

Ratio analysis

Horizontal analysis

Trend analysis

Vertical analysis

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Verified step by step guidance

Understand the concept of 'Horizontal Analysis': Horizontal analysis involves comparing financial data over multiple periods to identify trends and changes in a company's financial condition and performance. It uses a base amount from a prior period as a reference point.

Differentiate between the options provided: Ratio analysis focuses on relationships between financial statement items, trend analysis examines patterns over time, and vertical analysis compares items within a single financial statement as percentages of a base amount.

Recognize that 'Horizontal Analysis' is specifically about comparing financial data to a base amount over time, making it the correct answer in this context.

Review examples of horizontal analysis: For instance, comparing revenue from one year to the next and calculating the percentage change relative to the base year.

Apply this understanding to similar problems: When asked about comparisons to a base amount over time, identify it as horizontal analysis and distinguish it from other types of analysis.