Statements regarding a horizontal analysis

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All of the following statements regarding a horizontal analysis are true except:

1. When two statement are compared in horizontal analysis, the earlier statement is used as the base for computing the amount and the percent of change.

2. A horizontal analysis is used to compare an item in a current statement with the same item in prior statements.

3. A horizontal analysis can be performed on a balance sheet and income statement, but not on a statement of cash flows.

4. If Fees Earned in 2009 is $150,000 and Fees Earned in 2010 is $187,500, a horizontal analysis will indicate a 25% increase over this period.

Reference no: EM13148106

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