Directions: Read each senterce carefully and detemine whether the statement is TRUE or FALSE. Write your 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 has decreased by 80% during the day. 2. In 2019, Entity A reported sales of P100 and profit of P20. In a vertical analysis, a financial statement user would conclude that Entity A was able to generate 20% profit from every peso of its sales during the period. 3. Entity A reported inventory 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 increased by 50% from2018 to 2019. 4. An analysis of the intenelationships of infomation in a single period, expressed as nerentages of a common denomimtor js called horizortal analysis
Directions: Read each senterce carefully and detemine whether the statement is TRUE or FALSE. Write your 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 has decreased by 80% during the day. 2. In 2019, Entity A reported sales of P100 and profit of P20. In a vertical analysis, a financial statement user would conclude that Entity A was able to generate 20% profit from every peso of its sales during the period. 3. Entity A reported inventory 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 increased by 50% from2018 to 2019. 4. An analysis of the intenelationships of infomation in a single period, expressed as nerentages of a common denomimtor js called horizortal analysis
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Number 3 to 7
Transcribed Image Text:Directions: Read each senterce carefully and determine whether the statement is TRUE or FALS E. Write
your 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 has
decreased by 80% during the day.
2. In 2019, Entity A reported sales of P100 and profit of P20. In a vertical analysis, a
financial statement user would conclude that Entity A was able to generate 20% profit from every peso of
its 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 increased
by 50% from2018 to 2019.
4. An analysis of the intenelationships of infomation in a single period, expressed as
parcentages 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 of
information. A major source of infomation is the firancial statements.
7. Financial statements are useless to a person who does not know how to interpret the
informationcontained in the report.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education