Question

The following is summary of information presented on the financial statements of a company on December​ 31, 2015. Account 2015 2014 Current Assets $88,000 $74,000 Accounts Receivable 61,000 72,000 Merchandise Inventory 64,000 60,000 Current Liabilities 52,000 46,000 Long−term Liabilities 40,000 51,000 Common Stock 70,000 54,000 Retained Earnings 66,000 45,000 What would a horizontal analysis report show with respect to long−term ​liabilities?

Answer 1

Answer: Long-term liabilities decreased by 21.57%

Step-by-step explanation:

Horizonal analysis shows the change in the amount in question over a period of time which in this case is one year from 2014 to 2015.

The Long-term liabilities in 2014 was $51,000 and $40,000 in 2015.

Horizontal analysis will be ;

= (40,000 - 51,000) / 51,000

= -0.21568

= -21.57%

Long-term liabilities decreased by 21.57%