Horizontal analysis is
A)looking at the changes in the account balances reported on a financial statement over time.
B)looking at the changes in the account balances within a financial statement for one year.
C)preparing an analysis of the profitability ratios in columns.
D)looking at the changes in the account balances within a financial statement for three years.

Question

Quizplus · Accepted Answer

Horizontal analysis involves comparing changes in account balances on a financial statement over multiple periods, typically years. Therefore, option A is the correct choice. Option B only looks at changes in one year, while option D specifies a particular time frame of three years. Option C describes vertical analysis, which focuses on comparing line items within a financial statement rather than changes over time.

Horizontal Analysis Is