A helpful approach in examining changes in the relative size of account balances within a single statement is referred to as
A)common-size analysis and trend analysis.
B)vertical analysis and horizontal analysis.
C)trend analysis and horizontal analysis.
D)common-size analysis and vertical analysis.

Question

Quizplus · Accepted Answer

Common-size analysis and vertical analysis both involve expressing account balances as a percentage of a common base, such as total assets or total liabilities and equity. This allows for easier comparisons between different accounts and periods, and can highlight changes in the relative size of account balances. Horizontal analysis, on the other hand, involves comparing account balances between different periods, and trend analysis involves identifying patterns over time. While these approaches can also be useful, they do not specifically focus on changes in relative size within a single statement.

A Helpful Approach in Examining Changes in the Relative Size