The percentage analysis of changes of corresponding items in comparative financial statements is referred to as horizontal analysis.
A. True
B. Fals
A
To determine whether the statement is true or false, we can break it down and analyze the components of the statement.
The statement is saying that the percentage analysis of changes of corresponding items in comparative financial statements is referred to as horizontal analysis.
Let's analyze the terms used:
1. Comparative Financial Statements: Comparative financial statements refer to a set of financial statements that present the financial position and performance of a company for multiple periods, usually for consecutive years. These statements are used to compare how the company's financials have changed over time.
2. Percentage Analysis: Percentage analysis involves calculating the percentage change in a specific variable or item over a given period. It is a way to measure the relative change in a financial statement item.
3. Horizontal Analysis: Horizontal analysis, also known as trend analysis, is a technique used to evaluate changes in financial statement items over time. It involves comparing financial statement data from multiple periods to identify trends and patterns.
Now, considering the definitions above, it is clear that the statement is true. Horizontal analysis does involve performing percentage analysis on corresponding items in comparative financial statements to identify the changes over time.
Therefore, the correct answer is A. True.