Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Analysis of Financial Statements

Question:
What is the other name for the vertical analysis of financial statements?
Options:
Dynamic Analysis
Structural Analysis
Static Analysis
None of these
Correct Answer:
Static Analysis
Explanation:
Static analysis of financial statement covers a period of one year and the analysis is made on the basis of only one set of financial statements. Static analysis is also called vertical analysis. Static analysis of financial statement fails to incorporate the periodic changes, so it may not be very conductive to a proper understanding of the financial position of the firm.