The Stemple Corporation data for the current year: What would a horizontal analysis report with respect to common stock?

Question

The Stemple Corporation data for the current year:  What would a horizontal analysis report with respect to common stock?

Quizplus · Accepted Answer

A horizontal analysis involves comparing financial data from the current year to data from previous years. Common stock is a component of the balance sheet, so we would compare the common stock from the current year to the common stock from the prior year. Without knowing the prior year's common stock value, we cannot calculate the percentage increase (Choice C). Sales revenue and sales returns (Choices A and D) are components of the income statement and not directly related to common stock. Therefore, the correct answer is B: An increase of $6,000 in common stock.

The Stemple Corporation Data for the Current Year: What