Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 1

Analyzing Comparative Financial Statements Using Horizontal Analyses
The comparative financial statements prepared at December 31, 2013, for Golden Corporation showed the following summarized data:

Required:
1. Complete the two final columns shown beside each item in Golden Corporation's comparative financial statements. Round the percentages to one decimal place.
TIP: Calculate the Increase (decrease) by subtracting 2012 from 2013. Calculate the percentage by dividing the amount of increase (decrease) by the 2012 balance.
2. Use the horizontal (trend) analyses to identify (a) a large percentage change in one account that is accompanied by a small dollar change, and (b) a directional change in one account balance that is inconsistent with the direction of change in a related account balance.