Which of the following statements is NOT true about Comparative Statements?
- AThese are the statements showing the profitability and financial position of a firm for different periods of time.
- BThis analysis is also known as 'vertical analysis',
- CComparative figures indicate the trend and direction of financial position and operating results.
- DThe financial data will be comparative only when same accounting principles are used in preparing these statements.
Solution & Step-by-step Explanation
Comparative financial statement analysis studies data across multiple consecutive accounting periods, making it a Horizontal Analysis (or dynamic analysis).Vertical Analysis (or static analysis) reviews data from a single period, such as in Common-Size statements. Therefore, option B is incorrect.