Horizontal analysis of financial statements:

A Compares ratios to industry

B Compares line items across multiple periods to identify trends and growth rates

C Compares items within one period

D Only applies to the balance sheet

✓ Correct Answer: Option B

Horizontal (trend) analysis: compares financial data across periods. Calculates % change = (current - prior) / prior. Identifies trends, growth patterns, and anomalies over time.

💡 Why is B) the correct answer?

The correct answer to the question "Horizontal analysis of financial statements:" is Option B: Compares line items across multiple periods to identify trends and growth rates.

The other options — A) Compares ratios to industry, C) Compares items within one period, D) Only applies to the balance sheet — are incorrect for this Pre-MBA Exam Prep question. As explained above: Horizontal (trend) analysis: compares financial data across periods. Calculates % change = (current - prior) / prior. Identifies trends, growth patterns, and anomalies over time.

📚 About This Pre-MBA Exam Prep Practice Question

This 2-level Pre-MBA Exam Prep question from the Accounting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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Horizontal analysis of financial statements:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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