Chapter 2, Problem 2ADM

To determine

(a)

Horizontal analysis of balance sheet:

In horizontal analysis of balance sheet, the amount of each item of the current year financial statement is compared with the previous year financial statement. The amount of each item increased or decreased in the current balance sheet, and its respective percentage can be computed by taking the earlier statement as the base.

To prepare: A horizontal analysis of the two balance sheets.

(b)

To determine

To interpret: The horizontal analysis with respect to the change in total assets, total liabilities, and total stockholder’s equity.