carerul statement is True or False. 1. Financial statement analysis uses computational and analytical techniques to evaluate the company's risks, performance, financial health, and future prospects with the objective of making economic decisions. 2. Horizontal analysis is the financial analysis technique that compares the balances of two accounts in one reporting period. 3. Horizontal analysis can be performed with the Statement of Financial Position and the Statement of Comprehensive Income. 4. Vertical analysis compares the balances of one account over different periods. 5. A common-size Statement of Financial Position presents accounts expressed as a percentage of total liabilities and equity.

carerul statement is True or False. 1. Financial statement analysis uses computational and analytical techniques to evaluate the company's risks, performance, financial health, and future prospects with the objective of making economic decisions. 2. Horizontal analysis is the financial analysis technique that compares the balances of two accounts in one reporting period. 3. Horizontal analysis can be performed with the Statement of Financial Position and the Statement of Comprehensive Income. 4. Vertical analysis compares the balances of one account over different periods. 5. A common-size Statement of Financial Position presents accounts expressed as a percentage of total liabilities and equity.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

7:57 AM 5.3KB/s O ..
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TRUE OR FALSE: Read each sentence carefully and determine whether thne
statement is True or False.
1. Financial statement analysis uses computational and analytical techniques
to evaluate the company's risks, performance, financial health, and future
prospects with the objective of making economic decisions.
2. Horizontal analysis is the financial analysis technique that compares the
balances of two accounts in one reporting period.
3. Horizontal analysis can be performed with the Statement of Financial
Position and the Statement of Comprehensive Income.
4. Vertical analysis compares the balances of one account over different
periods.
5. A common-size Statement of Financial Position presents accounts
expressed as a percentage of total liabilities and equity.
Activity 2
Problem 1: The aggregated Statement of Financial Position of Jenny Company is
presented below:
12/31/20S4
12/31/20S3
Current Assets
P500,000.00
1,584,000.00
P400,000.00
1,320,000.00
Property, Plant, and Equipment, net
Current Liabilities
364,000.00
280,000.00
Long-Term Liabilities
Owner's Capital
380,000.00
1.060,000.00
532,000.00
1,188,000.00
Required:
1. Perform horizontal analysis for 20S4 using 20S3 as base year.
2. Perform vertical analysis for 20S4 and 20S3 Statement of Financial Position
16 / 18
Problem 2.
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Question: When preparing financial statements, which involve the culmination of various accounting principles and concepts, the process is crucial in portraying a company's financial health and performance. Among the key components, the income statement and the balance sheet stand as fundamental snapshots. The income statement delineates a company's revenues, expenses, and ultimately its profitability over a specific period, employing either the accrual basis or cash basis accounting. On the other hand, the balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity at a given point in time, adhering to the accounting equation where assets are equal to liabilities plus shareholders' equity. Furthermore, the matching principle necessitates that expenses be recorded in the same period as the related revenues they helped generate, facilitating a more accurate representation of the company's financial performance. In the context of accounting…