In performing a vertical analysis the base for prepaid expenses is
A) total current assets.
B) total assets.
C) total liabilities and stockholders' equity.
D) prepaid expenses.

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 the financial statements as a percentage of a base item, and for the balance sheet, each asset, including prepaid expenses, is typically expressed as a percentage of total assets to show its relative size and importance.

In Performing a Vertical Analysis the Base for Prepaid Expenses