**Horizontal Analysis of Financial Accounts**This exercise demonstrates the computation of annual dollar changes and percent changes for specified financial accounts. Any decreases are indicated with a minus sign, and percent changes are rounded to one decimal place.### Data TableThe table displays data for "Current Year" and "Prior Year" alongside columns intended for calculating the "Dollar Change" and "Percent Change" for three accounts: short-term investments, accounts receivable, and notes payable.#### Financial Account Details- **Short-term Investments** - Current Year: $377,232 - Prior Year: $236,026- **Accounts Receivable** - Current Year: $99,828 - Prior Year: $103,326- **Notes Payable** - Current Year: $0 - Prior Year: $90,624### Calculation of Percent Change- **Percent Change Formula**: \[ \text{Percent Change} = \left(\frac{\text{Current Year} - \text{Prior Year}}{\text{Prior Year}}\right) \times 100 \]#### Analysis Table- **Short-term Investments**: - **Dollar Change**: Calculated as the difference between the current year and prior year amounts. - **Percent Change**: Calculated using the formula above.- **Accounts Receivable**: - **Dollar Change**: The difference between figures from the two years. - **Percent Change**: Computed as a percentage of the prior year's amount.- **Notes Payable**: - **Dollar Change**: The change is the negative of the prior year amount as the current year is zero. - **Percent Change**: Calculated in percentage terms based on the prior year.This analysis helps in understanding year-to-year changes and trends in financial position through horizontal analysis of accounts.

HORIZONTAL ANALYSIS Horizontal analysis is the comparison of historical financial information over various reporting periods. Parcentage Change is Computed :— = (Current Year - Base Year) ÷ Base Year * 100 Dollar Change is Computed :— = Current Year - Base Year Working Note #1 :— Dollar Change is Computed = Current Year - Base Year Working Note #2 :— Parcentage Change is Computed = (Current Year - Base Year) ÷ Base Year Requirement# :— Statement Showing annual dollar changes and percent changes for each of the following accounts. Horizontal Analysis - Calculation of Percentage Change Numerator / Denominator Percentage Change Current Year Minus Base Year / Base Year Amount Current YearA Prior YearB Dollar ChangeC = (B-A) Parcentage Change(C÷B)*100 Short term Investment $377,232 $236,026 $141,206 59.8% Account Receivable $99,828 $103,326 ($3,498) (3.4%) Notes Payable $0 $90,624 ($90,624) (100%)

Business

Accounting

QS 17-4 (Algo) Horizontal analysis LO P1 Compute the annual dollar changes and percent changes for each of the following accounts. (Decreases should be indicated with a minus sign. Round percent change to one decimal place.) Short-term investments Accounts receivable Notes payable Percent Change = Short-term investments Accounts receivable Notes payable $ Current Year $ 377,232 99,828 0 Prior Year $ 236,026 103,326 90,624 Horizontal Analysis - Calculation of Percent Change Numerator: 1 Current Year 377,232 $ 99,828 0 Prior Year 236,026 103,326 90,624 Denominator: Dollar Change Percent Change % % %

QS 17-4 (Algo) Horizontal analysis LO P1 Compute the annual dollar changes and percent changes for each of the following accounts. (Decreases should be indicated with a minus sign. Round percent change to one decimal place.) Short-term investments Accounts receivable Notes payable Percent Change = Short-term investments Accounts receivable Notes payable $ Current Year $ 377,232 99,828 0 Prior Year $ 236,026 103,326 90,624 Horizontal Analysis - Calculation of Percent Change Numerator: 1 Current Year 377,232 $ 99,828 0 Prior Year 236,026 103,326 90,624 Denominator: Dollar Change Percent Change % % %

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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