The Following Is a Summary of Information Presented on the Financial

question 134

Multiple Choice

The following is a summary of information presented on the financial statements of The Cake Company on December 31, 2014.
$\begin{array}{|l|r|c|}\hline \text { Account }&2014&2013\\\hline \text { Current assets } & \$ 65,000 & \$ 50,000 \\\hline \text { Accounts receivable } & 80,000 & 75,000 \\\hline \text { Merchandise inventory } & 50,000 & 40,000 \\\hline \text { Current liabilities } & 75,000 & 50,000 \\\hline \text { Long-term liabilities } & 30,000 & 50,000 \\\hline \text { Common stock } & 50,000 & 40,000 \\\hline \text { Retained earnings } & 40,000 & 25,000\\\hline \\\hline \text { Net sales revenue } & \$ 525,000 & \$ 500,000 \\\hline \text { Cost of goods sold } & 400,000 & 395,000 \\\hline \text { Gross profit } & \$ 125,000 & \$ 105,000 \\\hline \text { Selling and general expenses } & 45,000 & 50,000 \\\hline \text { Net income before income tax expense } & \$ 80,000 & \$ 55,000 \\\hline \text { Income tax expense } & \$ 24,000 & 16,500 \\\hline \text { Net income } & \$ 56,000 & \$ 38,500 \\\hline\end{array}$


-
What would horizontal analysis report with respect to net income before income tax expense and net income?

• A) That both net income before income tax expense and net income are 45.45% of net sales revenue
• B) A $25,000 increase in both net income before income tax expense and net income
• C) A 45.45% increase in both net income before income tax expense and net income
• D) A 145% increase in both net income before income tax expense and net income

---

Definitions:

Creatinine Levels

The concentration of creatinine in the blood or urine, used as an indicator of kidney function.

Acute Renal Failure

A rapid loss of kidney function that results in the inability to effectively filter waste products from the blood.

Amyotrophic Lateral Sclerosis

A progressive neurodegenerative disease affecting nerve cells in the brain and spinal cord, leading to loss of muscle control.

Priority Problem

An issue identified as having significant importance or urgency, requiring immediate attention or action to prevent or address serious outcomes.