The following is a summary of information presented on the financial statements
ID: 2328575 • Letter: T
Question
The following is a summary of information presented on the financial statements of a company on December 31, 2019 Account Net Sales Revenue Cost of Goods Sold Gross Profit Selling Expenses Net Income Before Income Tax Expense Income Tax Expense Net Income 2018 $600,000 $501,000 455,000 400,000 $145,000 $101,000 53,000 $95,000 $48,000 24,000 $59,000 $24,000 2019 50,000 36,000 With respect to net income, a horizontal analysis reveals (Round your answer to two decimal places.) O A. a $24,000 increase in net income O B. a 145.83% increase in net income ° C. that net income is 14.58% of net sales revenue O D. a 145.83% decrease in net incomeExplanation / Answer
With respect to net income, a horizontal analysis reveals a 145.83% increase in net income.
Explanation:
Horizontal analysis is a technique used to find a trend in the corresponding figures of the financial year for one or more than one yeras. In Horizontal analysis a year is taken as base year on the basis of which complete analysis will be done. It is done by calculating percentage change
In the given question base year will be 2018.
Percentage change = {(net income of 2019-net income of 2018)/ net income of 2018} *100
={($ 59000-24000)/ 24000} *100
= 145.83 % increase
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