Q. Learning objectives of Horizontal and vertical analysis?

- An account is a storage element used to classify and summarize money measurements of business activities of a similar nature.

- A firm sets up an account at any time it requires to provide useful information about a particular business item to some party having a valid interest in the business.

- A T-account look like the letter T.

- Debits are entries taking place the left side of a T-account.

- Credits are entries taking place the right side of a T-account.

- Debits increase expense, asset and Dividends accounts.

- Credits raise stockholders' equity, liability and revenue accounts.

- Analyze transactions by exploratory source documents.

- Journalize the transactions in the journal.

- Post journal entries headed for the accounts in the ledger.

- Organize a trial balance of the accounts and complete the work sheet.

- Organize financial statements.

- Post and Journalize adjusting entries.

- Post and Journalize closing entries and prepare a post-closing trial balance.

- A journal contains a sequential record of the transactions of a business. An instance of a general journal is shown in Exhibit 11. Journalizing is the procedure of entering a transaction in a journal.

- Posting is the procedure of transferring information recorded in the journal to the proper places in the ledger.

- Cross-indexing is the placing of (a) the account number of the ledger account in the general journal and (b) the general journal page number in the ledger account.

- A trial balance is a catalogue of the ledger accounts and their debit or credit balances.

- If the trial balance doesn't balance an accountant works backward to discover the error.

- Horizontal examination involve calculating the dollar and/or percentage changes in an item from one year to the next.

- Vertical analysis demonstrates the percentage that each item in a financial statement is of some significant total.