Horizontal analysis showed a 25% increase in accounts receivable in 2022 over 2021.Vertical analysis showed accounts receivable declining from 7.5% to 6.8% over the same period.Given this information, what conclusion(s) may be reached?
A)The dollar amount of accounts receivable increased.
B)The dollar amount of accounts receivable decreased.
C)It cannot be determined if the dollar amount of accounts receivable increased or decreased.
D)This result is impossible.An error has been made in the calculations.

Question

Quizplus · Accepted Answer

Horizontal analysis indicating a 25% increase in accounts receivable means the dollar amount increased, despite the vertical analysis showing a percentage decline in its proportion to total assets.

Horizontal Analysis Showed a 25% Increase in Accounts Receivable in 2022