The percentage analysis of changes of corresponding items in comparative financial statements is referred to as horizontal analysis.
A. True
B. False
A
To confirm if the statement is true or false, we need to understand the concept of horizontal analysis and its relation to comparative financial statements.
Horizontal analysis, also known as trend analysis, is a financial analysis method that compares financial statements over consecutive periods to identify changes and trends. It allows for the analysis of the percentage or dollar amount changes in corresponding items across multiple periods.
Comparative financial statements, on the other hand, are financial statements that present the financial information of an organization for multiple periods side by side, usually in a columnar format. These statements allow for easy comparison of financial data between different time periods.
Based on this information, we can conclude that the statement is true. The percentage analysis of changes in corresponding items in comparative financial statements is indeed referred to as horizontal analysis.