Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:

Analysis of financial statement for single year is called as which type of analysis?

Options:

Vertical analysis

Dynamic Analysis

Structural Analysis

Functional Analysis

Correct Answer:

Vertical analysis

Explanation:
Vertical analysis, also known as common-size analysis, is a financial analysis technique used to assess the relative proportions of different items within a financial statement. It involves expressing each line item of a financial statement as a percentage of a common base amount. The purpose of vertical analysis is to identify the composition and significance of individual elements in relation to the total or the base amount.