Introduction:
Horizontal Percentage Analysis
• Horizontal Percentage Analysis is a technique of performance measurement and evaluation where the performance of the current year is compared to that of a base year and the direction of the results are analyzed.
• The movement of the results can be interpreted as a positive or favorable Horizontal movement or as a negative or unfavorable Horizontal movement
• Favorable Horizontals mean increase in revenues and decrease in costs and are hence subjective in nature. Unfavorable Horizontals mean decrease in revenues and increase in costs and are also subjective in nature.
• Horizontal analysis helps in evaluation of repetitive behavior as well as evaluation of effectiveness of strategies implemented by allowing analysis of performance over time.
• The following formula is used to calculate Horizontal percentage for each year:
To Calculate:
Annual Dollar changes and Percentage changes in each of the accounts.

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Chapter 17 Solutions
WORKING PAPERS F/ FUND ACCOUNTING
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- Choose a manufacturing company then discuss the following: First, name your company and list its main products and direct materials used. What is spoilage? Give an example of spoilage that might occur during the manufacturing of the company's product. What is scrap? Give an example of scrap that might occur during the manufacturing of the company's product. What does rework mean? Give an example of rework that might occur during the manufacturing of the company's product. A leading manufacturer recently said, "What has been regarded as normal spoilage in the past will not acceptable as normal spoilage in the future? What are they talking about? What do you think are the external or internal factors that may affect the level of normal spoilage in the future?arrow_forwardThe accounting equation helps keep financial records balanced. It shows that a company's assets are always equal to its liabilities plus stockholders' equity (Assets = Liabilities + Equity). This equation helps track how money moves in and out of a business. When a company buys or sells something, the equation makes sure everything is recorded correctly. Respond to the above paragrapharrow_forwardWhat is the role of the accounting equation in the analysis of business transactions?arrow_forward
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