A form of analysis in which each item on a report is shown as a percent of net sales is called a horizontal analysis of the income statement.

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Quizplus · Accepted Answer

The description given refers to vertical analysis, not horizontal analysis. In vertical analysis, each item on the income statement is expressed as a percentage of net sales, allowing for the assessment of relative size and proportion of each component. Horizontal analysis, on the other hand, involves comparing financial data over multiple periods to identify trends and growth patterns.

A Form of Analysis in Which Each Item on a Report