In performing a vertical analysis, the base for prepaid expenses is
A)total current assets.
B)total assets.
C)total liabilities.
D)prepaid expenses in a previous year.

Question

Quizplus · Accepted Answer

In a vertical analysis, the base for prepaid expenses is total assets. This is because vertical analysis involves expressing each item in a financial statement as a percentage of a base item, and for balance sheet items like prepaid expenses, the base is typically total assets to show the proportion of prepaid expenses relative to the overall assets.

In Performing a Vertical Analysis, the Base for Prepaid Expenses