. Directions: Read each senterce carefully and determine whether the statement is TRUE or FALS E. Writeyour answers on the space provided before each number.1. At the beginning of the day, you have P200 cash in your pocket. At the end of the day,you have P50 left. If you make a horizontal analysis of your cash, you would conclude that your cash hasdecreased by 80% during the day.2. In 2019, Entity A reported sales of P100 and profit of P20. In a vertical analysis, afinancial statement user would conclude that Entity A was able to generate 20% profit from every peso ofits sales during the period.3. Entity A reported irventory balances of P100 and P50 in 2019 and 2018, respectively.In a horizontal analysis, a financial statement user would conclude that Entity A's inventory has increasedby 50% from2018 to 2019.4. An analysis of the intenelationships of infomation in a single period, expressed asparcentages of a common denomirator, is called horizortal analysis.5. A comparison of infomation from one period to amther is called vertical analysis.6. When making business decisions, an entrepreneur will need various sources ofinformation. A major source of infomation is the firancial statements.7. Financial statements are useless to a person who does not know how to interpret theinformationcontained in the report.

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 59PSA: Using a Spreadsheet to Prepare a Statement of Cash Flows Jane Bahr, a controller of Endicott &...

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