Question

Consider the following statements.

Statement 1 - "Comparative statements are the form of horizontal analysis."

Statement 2 - Comparative statements shows the profitability and fin~cial position of a firm for different periods"

Options

• Only statement 1 is correct

• Only statement 2 is correct

• Both the statements are correct

• None of these

Answer 1

Both the statements are correct

Explanation:

Comparative Statements: These are financial statements that demonstrate a company's profitability and financial situation over time in a comparative format to offer a sense of two or more periods. It usually refers to the two most important financial statements prepared in a comparative format, namely the Balance Sheet and Income Statement. Horizontal analysis is another term for this type of investigation.