TRUE OR FALSE Horizontal analysis is possible for both an income statement and a statement of financial position. Financial analysis is primarily a matter of making relevant mechanical computations. It is possible that a decrease in gross profit rate may be offset by a decrease in expenses, thus resulting in an increase in net income. On a, common-size income statement, net income is given an equivalent of 100% Short-term creditors generally are more concerned with vertical analysis than with horizontal analysis. Percentage changes are usually computed by using the latest figure as a base. Industry standards tend to place the performance of a company in a more meaningful perspective. The peso amount of change during an accounting period for an item appearing in financial statements is less significant than the change measured as a percentage. An increase in sales volume generally is accompanied by a proportionate increase in net income. Common-size financial statements show peso change in specific items from one year to the next. The peso amount of a change during a period in a certain item appearing in financial statements is probably less significant than the change measured as a percentage. Percentage changes usually are computed by use of the amounts for the latest accounting period as a base. A business enterprise's earnings performance and its financial condition are the two primary concerns of the financial analys
TRUE OR FALSE Horizontal analysis is possible for both an income statement and a statement of financial position. Financial analysis is primarily a matter of making relevant mechanical computations. It is possible that a decrease in gross profit rate may be offset by a decrease in expenses, thus resulting in an increase in net income. On a, common-size income statement, net income is given an equivalent of 100% Short-term creditors generally are more concerned with vertical analysis than with horizontal analysis. Percentage changes are usually computed by using the latest figure as a base. Industry standards tend to place the performance of a company in a more meaningful perspective. The peso amount of change during an accounting period for an item appearing in financial statements is less significant than the change measured as a percentage. An increase in sales volume generally is accompanied by a proportionate increase in net income. Common-size financial statements show peso change in specific items from one year to the next. The peso amount of a change during a period in a certain item appearing in financial statements is probably less significant than the change measured as a percentage. Percentage changes usually are computed by use of the amounts for the latest accounting period as a base. A business enterprise's earnings performance and its financial condition are the two primary concerns of the financial analys
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter14: Completing A Quality Audit
Section: Chapter Questions
Problem 24CYBK
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Question
TRUE OR FALSE
- Horizontal analysis is possible for both an income statement and a
statement of financial position . - Financial analysis is primarily a matter of making relevant mechanical computations.
- It is possible that a decrease in gross profit rate may be offset by a decrease in expenses, thus resulting in an increase in net income.
- On a, common-size income statement, net income is given an equivalent of 100%
- Short-term creditors generally are more concerned with vertical analysis than with horizontal analysis.
- Percentage changes are usually computed by using the latest figure as a base.
- Industry standards tend to place the performance of a company in a more meaningful perspective.
- The peso amount of change during an accounting period for an item appearing in financial statements is less significant than the change measured as a percentage.
- An increase in sales volume generally is accompanied by a proportionate increase in net income.
- Common-size financial statements show peso change in specific items from one year to the next.
- The peso amount of a change during a period in a certain item appearing in financial statements is probably less significant than the change measured as a percentage.
- Percentage changes usually are computed by use of the amounts for the latest accounting period as a base.
- A business enterprise's earnings performance and its financial condition are the two primary concerns of the financial analyst.
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