Selected data from the financial statements are provided below:

-Refer to Rags to Riches. Which of the following would result from a horizontal analysis of the company's balance sheet?
A)Accounts receivable increased $22,000 or 57.9% during 2020.
B)Accounts receivable is five times larger than inventory in 2020.
C)Accounts receivable is 13.3% of total assets in 2020.
D)The accounts receivable turnover ratio is 7.76 in 2020.

Question

Selected data from the financial statements are provided below:
 
-Refer to Rags to Riches. Which of the following would result from a horizontal analysis of the company's balance sheet?
A)Accounts receivable increased $22,000 or 57.9% during 2020. 
B)Accounts receivable is five times larger than inventory in 2020. 
C)Accounts receivable is 13.3% of total assets in 2020. 
D)The accounts receivable turnover ratio is 7.76 in 2020.

Quizplus · Accepted Answer

A horizontal analysis compares financial data from one period to another to determine percentage increases or decreases. Choice A provides an example of an increase in accounts receivable during 2020. Choices B, C, and D provide static information about the balance sheet and do not reflect changes over time.

Selected Data from the Financial Statements Are Provided Below