In Performing a Vertical Analysis for a Merchandising Company, the Base

question 143

Multiple Choice

In performing a vertical analysis for a merchandising company, the base for sales on the income statement is

• A) net sales.
• B) total revenues.
• C) profit.
• D) cost of goods available for sale.

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Definitions:

Pretax Income

The amount of income earned by a business before taxes have been deducted.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Inventory Error

Mistakes in counting or valuing inventory that can result in incorrect financial statements.

Discrepancy

A difference or inconsistency found when comparing two or more items, figures, or documents.