16. What level of knowledge of business is assumed by current financial reporting standards? 17. Describe the factors involved in communicating useful financial information. ...

16. What level of knowledge of business is assumed by current financial reporting standards?

17. Describe the factors involved in communicating useful financial information.

18. Horizontal analysis refers to the study of an individual item or account over a period of time such as the current period only or over many periods. Three approaches are commonly used to review an account: study of absolute amounts, percentages, and trends. Explain why it is necessary to use all three approaches in performing a thorough analysis.

19. Explain what horizontal analysis is and how it might be used in financial statement analysis.

20. What is a primary drawback with examining and comparing absolute amounts from two businesses' financial statements?