Chapter 13, Problem 3QS

To determine

Comparative financial statements:

It refers to the past details of same items of consecutive income statements or balance sheet of the company. This statement is generally helpful to review changes in the account balance of particular person on a yearly basis.

Dollar changes:

It helps to compare financial statement over short time periods which are done by analyzing changes in the line.

The formula to calculate dollar change is,

$\text{Dollar}\text{Change}=\text{Analysis}\text{Period}\text{Amount}-\text{Base}\text{Period}\text{Amount}$

Percentage change:

In this method, prior year is used as a base period and the analysis helps in comparing financial statements.

The formula to calculate percentage change is,

$\text{Percentage}\text{Change}=\text{Analysis}\text{Period}\text{Amount}-\text{Base}\text{Period}\text{Amount}$

To identify: The annual dollar change and percentage change for each account.