Question

The following is a summary of information presented on the financial statements of a company on December​ 31, 2017.Account20172016Net Sales Revenue​ $604,000​ $504,000Cost of Goods Sold​453,000​400,000Gross Profit​ 151,000​104,000Selling Expenses​58,000​50,000Net Income Before Income Tax Expense​93,000​54,000Income Tax Expense​41,000​21,000Net Income​$52,000​$33,000With respect to net sales​ revenue, a horizontal analysis reveals​ ________.

Answer 1

Answer:

It shows a increment of 19.84% in net sales revenue.

Explanation:

In the horizontal analysis, the changes in the items of the financial statement should be recorded that would be proportionate to the sales amount.

The computation is shown below:

= (Difference in sales for two years ÷ last year sales) × 100

= ($100,000 ÷ $504,000) × 100

= 19.84%

Th difference of sales in two years is computed by

= Net Sales in 2017 - Net sales in 2016

= $604,000 - $504,000

= $100,000

It shows a increment of 19.84% in net sales revenue.