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Which of the following types of financial statement analysis would be used to see how sales revenue of a company has changed from one year to the next?

A. Vertical analysis of income statement

B. Vertical analysis of balance sheet

C. Horizontal analysis of balance sheet

D. Horizontal analysis of income statement

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To calculate the acid-test ratio, merchandise inventory and prepaid expenses are ignored.

True False

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Benchmarking is the comparison of a company's current year results with an earlier year's performance.

True False

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Acid-test ratio helps to measure a company's ability to pay all its current liabilities if they came due immediately.

True False

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An adverse opinion is issued if the auditor finds that the financial statements are presented fairly.

True False

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The following is summary of information presented on the financial statements of a company on December 31, 2015.

What would a horizontal analysis report show with respect to current liabilities?

2015 2014 Account Current Assets Accounts Receivable Mechandise Inventory Current Liabilities Long-term Liabilities Common stock Retained Earnings $65,000 $50,000 80,000 75,000 50,000 40,000 75,000 50,000 30,000 50,000 50,000 40,000 40,000 25,000 Net Sales Revenue Cost of Goods Sold Gross Profit Selling Expenses Net income before income tax expense Income tax expense Net Income $525,000 $500,000 400,000 395,000 $125,000 $105,000 45,000 50,000 $80,000 $55,000 16,500 $56.000 $38 500 24,000

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