Question

1. Which of the following statements about vertical analysis is correct:

   	a.	it compares numbers reported on the financial statements in the current period with those from the previous period
   	b.	it compares numbers reported on a financial statement to another number on the same statement
   	c.	it determines the profitability of the entity
   	d.	it compares ratios from different financial statements
   	e.	it requires a minimum of 3 years of data to provide meaningful analysis

1 points

Question 8

1. Holland Ltd made these estimates for the six months ending 31 December.

   Cash receipts from services provided	$60 000
   Cash payments for expenses	40 000
   Payment for purchase of equipment	18 500
   Depreciation of equipment	4 000
   Borrowings from the bank	15 000
   Rent paid in advance	3 000

   The cash balance at 1 July is $13 000. The estimated cash balance at 31 December is:

   	a.	deficit of $15 000
   	b.	surplus of $33 000
   	c.	surplus of $13 500
   	d.	surplus of $26 500
   	e.	surplus of $11 000

Answer 1

1) Option B

b.	compares numbers reported on a financial statement to another number on the same statement

Vertcal analysis presents the each item as a percentage of other item , also useful for trend Analysis

2) Option - D

	Particulars	Amt ($)	Amt ($)
	beginning Cash		13000
Add	Cash receipts	60000
	barrowings	15000	75000
			88000
Less;	Rent paid	3000
	Expenses	40000
	Equpment purchases	18500	61500
	Total		26500

answered by: anonymous