The Following Is a Summary of Information Presented on the Financial

question 116

Multiple Choice

The following is a summary of information presented on the financial statements of a company on 31 December 2017. $\begin{array}{|l|c|c|}\hline\text { Account } & 2017 & 2016 \\\hline \text { Current assets } & \$ 68,000 & \$ 52,000 \\\hline \text { Accounts receivable } & 34,000 & 30,000 \\\hline \text { Inventory } & 52,000 & 41,000 \\\hline \text { Current liabilities } & 76,000 & 49,000 \\\hline \text { Non-current liabilities } & 32,000 & 55,000 \\\hline \text { Share capital } & 51,000 & 42,000 \\\hline \text { Retained earnings } & 45,000 & 27,000\\\hline \\\hline \text { Sales revenue } & \$ 526,000 & \$ 501,000 \\\hline \text { Cost of sales } & 402,000 & 400,000 \\\hline \text { Gross profit } & \$ 124,000 & \$ 101,000 \\\hline \text { Selling expenses } & 47,000 & \$ 1,000 \\\hline \text { Profit before income tax } & \$ 77,000 & \$ 50,000 \\\hline \text { Income tax expense } & 24,000 & \$ 16,900 \\\hline \text { Profit } & \$ 53,000 & \$ 33,100 \\\hline \end{array}$ What would a horizontal analysis report show with respect to Current liabilities?

• A)a 55.1% increase in Current liabilities
• B)a 35.53% increase in Current liabilities
• C)a current ratio of 0.89
• D)Current liabilities are 37.25% of total capital

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Definitions:

Expense

Money spent or costs incurred in an organization’s efforts to generate revenue, representing the cost of doing business.

Self-leadership

The practice of intentionally influencing one’s own thinking, behavior, and actions towards achieving personal or professional goals.

Group Members

Individuals who belong to a collective or team, working together towards shared objectives or interests.

Favoritism

The unfair favoring of one person or group over others based on subjective preferences rather than objective merit.