An internal auditor considers the financial statement of an organization as part of a financial assurance engagement. The auditor expresses the organization's electricity and depreciation expenses as a percentage of revenue to be 10% and 7% respectively. Which of the following techniques was used by the internal auditor in this calculation?
The technique used by the internal auditor is vertical analysis. Vertical analysis involves expressing each item in a financial statement as a percentage of a base item within the same statement, which in this case is expressing electricity and depreciation expenses as a percentage of revenue. Horizontal analysis compares line items over multiple periods, ratio analysis involves comparing different line items to evaluate financial health, and trend analysis looks at trends over a period of time.
B is correct,
why is B? could you explain? thanks
B is the correct answer. Please update this admin.
Vertical analysis is a method of analyzing financial statements that list each line item as a percentage of a base figure within the statement. The first line of the statement always shows the base figure at 100%, with each following line item representing a percentage of the whole
B is correct, gleim, study unit 10, last page
Why not B?
a is correct
why is A? could you explain? thanks