Question

S11 5 A Vertical analys C. Dagonala D. Both and the Michael Jordan Shoes San t os 0 000: Good $46.000.orge s 534000 15000 2000, income of $3.000. you o prom o te woment you w the income statemente t isho A $90.000 B $45.000 C $34.000 D $3,000 E $80,000 Which of the following is an example of vertical analysis A Comparing gross profit across companies B. Comparing income statements as a percentage of C. Comparing debt with industry averages D. Comparing balance sheet items as a percentage of stockholders E Comparing assets and abilities CROSS companies of me F Comparing the change in sales over time 8 9. Which of the following is an example of horizontal analysis? A Comparing gross profit acOSS companies B. Comparing gross profit with operating expenses C. Comparing assets with equity D. Comparing the change in sales over time 10. Which of the following is not considered to be an analytical procedure? A. Comparisons of financial statement amounts with source documents (EX: Invoice). B. Comparisons of financial statement amounts with nonfinancial data (EX: Sq, footage per store) C. Comparisons of financial statement amounts with budgeted amounts D. Comparisons of financial statement amounts with comparable prior year amounts (Put 11. Analytical procedures is that they are not good at testing data/information/accounts on the the name of Financial Statement (Name only 1)) because management can manipulate the data to look a certain way by changing the timing of purchases or payables for a short period of time closer to year end. 11.

Answer 1

6.The answer for this question is B.

Horizontal analysis as it is comparing the sales figures on year to year basis. As we can see in the above question the line items are being compared on year to year basis.

7.The answer for this question is A.

In vertical analysis we compare divide each amount by the figure of sales. Hence the answer is 90000 that is the amount of sales.

8.The answer for this question is B.

In vertical analysis we compare each amount as a percentage of sales. The option states that compare income statement items with sales. Therefore that is the answer.

9.The answer for this question is A.

In Horizontal analysis we compare the figures from one year to another. The option states comparing gross profit across companies. Therefore, the answer is A.

10.The answer for this question is B.

The option states that we are comparing financial data with Non financial data.This is not a valid comparison. Hence the correct answer is option B. To compare any answers they should have the same base. Hence, this is not valid comparison.